Never run out of cash

Never run out of cash6 lessons from 6 years of entrepreneurship

in the web outsourcing industry

Roxana Olaru, Bucharest, July 2015

Cash Flow is the blood of a business

P 2

Timing

Movement

In-Out

Roxana Olaruwww.creadiv.ro, web development - web design – online promotions

The most expensive money is your ownTo use other people’s money efficientlyyou need to have good cash flow management

CASH FLOW is more important than your mother

P 3Roxana Olaruwww.creadiv.ro, web development - web design – online promotions

1) Reality is different than accounting

P 4

Without cash, profits are meaningless!

“Knowing whether you earned a profit (or created a loss) is not the same as knowing what happened to your cash," Phillip Campbell


Poor Cash-Flow Management

Business Failure

2) Plan your cash

P 5

Set cashflow targets

Create a Cash Flow Statement

Have financial discipline


Agnes Cserhati (AC Powercoaching): “90% of the SMEs I work with do not have a cashflow plan from day one, despite having forecasts of profit margins for years ahead!”

2) Plan your cash


Always know your Cash Balancenow and 6 months from now!

Plan for future cash shortfalls!

Expenses growth rate

Earning growth rate

2) Plan your cash

P 7

Divide revenues by category

Prioritize payments


Recurring payments

Non recurring payments

24% VAT

60% HR spendings + taxes20% suppliers10% investments10% savings

3) Cash coming in – cash going out

P 8

Cash in from clients quickly and pay suppliers late

Agree upon clear payment terms


• Invoice clients 1-10• Receive invoices

from suppliers 20-31

4) Get paid as soon as possible

P 9

Work with advance payments

Issue invoices promptly

Have and automated follow-up system

Make the payment process as easy as possible

Don’t deliver before payment

Rate clients

Sell more to existing “good clients”

Give discounts for rapid or advance payments

Avoid feelings when you “money talk”


5) Pay as late as possible

P 10

Suppliers are great creditors!

Pay on time, but not too early before the deadline

Group payments and simplify the process

Flexible payment terms might be better than lowest price

Fully understand the implication of earlier payments, even if you get offered discounts


6) People matter!

P 11

Value and nourish your relationships with clients and suppliers!

Have a good accountant / financial advisor


ExtraNever depend on only 1 client


P 12

?

Extra

Do your best!


Resources

P 14

MS Office Templates

Google Docs Templates

http://www.vertex42.com/ExcelTemplates/cash-flow-statement.html

https://www.score.org/resources/business-planning-financial-statements-template-gallery


Thank you!

Bd. Dacia, Nr. 99, Et. 4www.creadiv.ro

http://www.creadiv.ro/

Never run out of cash

Small Business & Entrepreneurship

Transcript of Never run out of cash