Archive for October, 2006
I own 2 retail stores. How can I find a short term investor to help my cash flow for the Christmas rush?
Dan A asked:
One of my locations is new, and needs some cash flow- my personal credit is at its max, The new location has SO much potential…. Do you know any good sources for small (15-30K) investments>
Dana Sabin
One of my locations is new, and needs some cash flow- my personal credit is at its max, The new location has SO much potential…. Do you know any good sources for small (15-30K) investments>
Dana Sabin
Cash Flow Loans: Help you Carry Out your Business
Any business activity requires a sustainable source of fund. Often your business may fail to generate appropriate funds even when it is making profit. This problem generally arises when the major income of the business is tied with receivables that take much time in liquidation. Taking the account of urgency of the requirement of your business, you are helped with Cash Flow Loans. Since, this financial assistance is granted after assessing the cash flow of a business, this is commonly known as cash flow loans.
Cash flow of company is that amount of cash that is left with a company after taxes, depreciation, or any other obligation. The cash flow of a company determines the repayment capability. Thus, the more the cash flow of the company, the more amount of loan it will get.
To obtain cash flow loans a company has to show a valid statement of total receivables and total payables. The surplus from receivables and payables shows a company’s financial strength, that’s why it is considered as the essential requirement while providing cash flow loan.
Cash flow loans are available in two types i.e. secured and unsecured. The secured type requires collateral or security that is generally the business assets. This type of the loan provides you a somewhat lower rate of interest and longer repayment duration. Whereas, with the unsecured form, no collateral is required that keeps a somewhat higher interest rate and shorter repayment duration.
Your good credit record can definitely yield a better deal for you. However, bad credit holders too have chance to avail this loan. Borrowers, having CCJs, arrears, defaults, IVAs, bankruptcy can even avail this loan but with somewhat higher rate of interest.
To avail this loan you can contact both offline and online lenders. The online lenders accept online application that voids much hassle documentation and saves a lot of your time. A horde of these lenders are available in the market with differed rate of interest that can be compared for a better option.
For all that, the cash flow loans help you when your business is on the verge of great loss. It is available to you only by assessing the cash flow of your business. So, a good business performance can help you availing the appropriate fund for your business. It helps you grabbing a potential opportunity that you may loose because of lacking on appropriate fund.
By: Angela Alderton
About the Author:
Cash flow of company is that amount of cash that is left with a company after taxes, depreciation, or any other obligation. The cash flow of a company determines the repayment capability. Thus, the more the cash flow of the company, the more amount of loan it will get.
To obtain cash flow loans a company has to show a valid statement of total receivables and total payables. The surplus from receivables and payables shows a company’s financial strength, that’s why it is considered as the essential requirement while providing cash flow loan.
Cash flow loans are available in two types i.e. secured and unsecured. The secured type requires collateral or security that is generally the business assets. This type of the loan provides you a somewhat lower rate of interest and longer repayment duration. Whereas, with the unsecured form, no collateral is required that keeps a somewhat higher interest rate and shorter repayment duration.
Your good credit record can definitely yield a better deal for you. However, bad credit holders too have chance to avail this loan. Borrowers, having CCJs, arrears, defaults, IVAs, bankruptcy can even avail this loan but with somewhat higher rate of interest.
To avail this loan you can contact both offline and online lenders. The online lenders accept online application that voids much hassle documentation and saves a lot of your time. A horde of these lenders are available in the market with differed rate of interest that can be compared for a better option.
For all that, the cash flow loans help you when your business is on the verge of great loss. It is available to you only by assessing the cash flow of your business. So, a good business performance can help you availing the appropriate fund for your business. It helps you grabbing a potential opportunity that you may loose because of lacking on appropriate fund.
By: Angela Alderton
About the Author:
Angela Alderton is a specialist advisor of Small cash loans and is curently working with Cash Loans UK. She holds a masters degree in economics from University of Warwick. For further details of cash flow loans, bad credit cash loans, cash loan, cash loan UK, quick cash loan, bad credit cash loan you need to visit http://www.cashloans.uk.com/
Tanja Legallo
Cash Flow Rules!
There are alot of definitions as to what exactly cash flow means which can cause a little confusion. This is how I explain cash flow. It is the amount of money you have left during a given period of time once all your bills are paid. But lets not confuse this with profit and loss statements. Cash flow is a physical thing, how much actual cash is left in the bank, while profit and loss statements are recordings in your financial statements but don’t reflect physically held money.
Now if you run a retail business that generates immediate cash from each sale then cash flow and profit and loss statments will more closely reflect each other. But if your business is in the position of having to bill your customers and then waiting to get paid then cash flow becomes the more important of the two.
So that we can fully explain what cash flow is we’ll compare it to a profit and loss statement. Over the course of a month or year you’ll make sales to customers and you’ll bill them at either the time of the sale or once the order is filled depending on the business you’re in and the accounting methods you use. When you buy something or pay someone you account for the money right away even if you have thirty days to pay them. Again this depends on your accounting methods but for many small businesses this is the simplest method of accounting to use. Once a bill comes due you pay it.
With cash flow we don’t worry about what is billed but instead we worry about how much money is actually collected. On the other end we worry about how much money we actually give to our vendors, employees and other people we owe money to. To stay in business we have to keep paying them. We may be late on occassion but that bill isn’t going anywhere till we pay it. So cash flow in it’s most basic form is how much money we collect and how much money we send out. For businesses in a position of having to extend credit this can cause a problem. Not every customer you have will be able to pay you on time.
It is totally possible for a company to show a profit while in fact losing it’s shirt. Inevitably your going to have customers that can’t pay their bills on time. This of course can be for any number of reasons. The one’s you’ll need to watch out for are the one’s that don’t have the money to pay you. That’s the one you could end up facing yourself if you’re not careful.
Ideally the amount billed in a given month and the amount collected will be virtually the same or you’ll have collected more than you sent out. Then it’s a simple matter of managing your expenses. If we lived in a perfect world than that would be the way it goes but we know better. What you as the owner of your business need to do is to effectively manage your cash flow. You need to make sure that what you are spending isn’t exceeding what you are collecting not what you’re billing. Hopefully you have a credit line with your bank that can help alleviate the problem but if not you need to be very careful or you might wind up using something like your credit cards to help cover the bills. This can only be considered a short tern fix. But it will compound the problem later.
So while your profit and loss statements are in themselves just as important as ever the real gauge of your companies immediate health might better be found in your cash flow statement. Because ending up with a negative number on that balance could eventually leave your bank account empty.
By: Cash Miller
About the Author:
Now if you run a retail business that generates immediate cash from each sale then cash flow and profit and loss statments will more closely reflect each other. But if your business is in the position of having to bill your customers and then waiting to get paid then cash flow becomes the more important of the two.
So that we can fully explain what cash flow is we’ll compare it to a profit and loss statement. Over the course of a month or year you’ll make sales to customers and you’ll bill them at either the time of the sale or once the order is filled depending on the business you’re in and the accounting methods you use. When you buy something or pay someone you account for the money right away even if you have thirty days to pay them. Again this depends on your accounting methods but for many small businesses this is the simplest method of accounting to use. Once a bill comes due you pay it.
With cash flow we don’t worry about what is billed but instead we worry about how much money is actually collected. On the other end we worry about how much money we actually give to our vendors, employees and other people we owe money to. To stay in business we have to keep paying them. We may be late on occassion but that bill isn’t going anywhere till we pay it. So cash flow in it’s most basic form is how much money we collect and how much money we send out. For businesses in a position of having to extend credit this can cause a problem. Not every customer you have will be able to pay you on time.
It is totally possible for a company to show a profit while in fact losing it’s shirt. Inevitably your going to have customers that can’t pay their bills on time. This of course can be for any number of reasons. The one’s you’ll need to watch out for are the one’s that don’t have the money to pay you. That’s the one you could end up facing yourself if you’re not careful.
Ideally the amount billed in a given month and the amount collected will be virtually the same or you’ll have collected more than you sent out. Then it’s a simple matter of managing your expenses. If we lived in a perfect world than that would be the way it goes but we know better. What you as the owner of your business need to do is to effectively manage your cash flow. You need to make sure that what you are spending isn’t exceeding what you are collecting not what you’re billing. Hopefully you have a credit line with your bank that can help alleviate the problem but if not you need to be very careful or you might wind up using something like your credit cards to help cover the bills. This can only be considered a short tern fix. But it will compound the problem later.
So while your profit and loss statements are in themselves just as important as ever the real gauge of your companies immediate health might better be found in your cash flow statement. Because ending up with a negative number on that balance could eventually leave your bank account empty.
By: Cash Miller
About the Author:
Cash Miller is an experienced entrepreneur and speaker who has spent the last decade devoted to being a small business owner. His years of experience in small business has provided invaluable experience in such topics as planning, management, marketing, human resources, ecommerce, and taxation. If you are looking for more information on this subject and others related to starting and running a small business you can visit his website at http://www.SmallBusinessDelivered.com
Mason Blais
What additional information does the Cash Flow Statement give about the financial position of a business?
Muhammad H asked:
What additional information does the Cash Flow Statement give about the financial position
of a business after profit/loss accounts and balance sheets?
Grant Reta
What additional information does the Cash Flow Statement give about the financial position
of a business after profit/loss accounts and balance sheets?
Grant Reta
How to Create a More Positive Cash Flow
If, as many experts agree, that the golden rule of business is “cash is king,” then happiness in business is a positive cash flow. Cash flow is the movement of money in and out of your business over a defined period of time (weekly, monthly, or quarterly). If cash coming into your business exceeds the cash going out of your business, your company has a positive cash flow. However, if your cash outflow exceeds the cash inflow, then your company has a negative cash flow. To create a positive cash flow, generate more cash and collect the cash in a more timely manner and at the same time, maintain or reduce your expenses.
Positive cash flow does not happen by accident; it happens because a well-defined financial management technique called “cash management” is functioning. A good cash management system helps to efficiently and effectively manage the activities that produce cash. Maintaining an optimal level of cash that is neither excessive, nor deficient is of the upmost importance. Accelerating cash inflows wherever possible is a mandatory practice. Two activities that accelerate cash inflows include invoicing customers as quickly as possible and collecting cash on past due accounts. Delaying cash outflows until they come due is a critical step in good cash conservation. Negotiating extended payment terms with suppliers also delays cash outflows. In addition, investing surplus cash to earn the highest rate of return is a good business practice.
In order to understand the magnitude and timing of cash flows, plotting cash movement, with the use of cash flow forecasts, is critical. A cash flow forecast provides you with a clearer picture of your cash sources and their expected date of arrival. Identifying these two factors will help you to determine “what” you will spend the cash on, and “when” you will need to spend it.
Your financial reporting documents should include an Income Statement, a Balance Sheet and a Statement of Cash Flows. Your “cash flow forecast” reflects the same three types of cash flow activities that appear in your Statement of Cash Flows. The three types of cash flow activities are:
• Cash Flows from Operating Activities: This is the cash flow that is generated which is the direct result of the sales of your product/services.
• Cash Flows from Investing Activities: This is the cash flow that is generated from non-operating activities, such as, investments in plant and equipment or other fixed assets.
• Cash Flows from Financing Activities: This is the cash flow that is generated from external sources— lenders and investors.
These three types of cash flow activities are interrelated. They depend on, and affect each other. The cash flow forecast should take this into account, and provide a complete picture of where cash will come from and how it will be used for the period being forecasted. The relationships between the different cash flow activities may depend on the nature of your business, the stage of development of your business, as well as, general economic conditions, or conditions within the market or industry in which your business operates.
Cash outflows and inflows seldom occur together. In most cases, cash inflows seem to lag behind cash outflows, leaving your business short on cash. This shortfall is your “cash flow gap.” The cash flow gap is the period (number of days) between your business payment of cash for goods and services purchased, and the receipt of cash from your customers for goods or services sold. In other words, inventory days on hand + receivables collection period – accounts payable period = the cash flow gap. This interval, the cash flow gap, must be financed. Keep in mind the fact, that for each day your cash flow gap is extended, so too is the amount of interest being accrued. Even when interest rates are low, the cost of financing can add up quickly.
Here are three ways your company can narrow its cash flow gap:
1. Stretch out your payment terms on purchases for inventory. In most industries, payment terms are largely determined by tradition and vary from industry to industry.
2. Shorten the collection period. The faster your company can collect money for products and/or services sold, the smaller its cash flow gap will be.
3. Increase inventory turnover. The faster your company moves inventory, the less cash it needs. The key to managing inventory successfully is to continuously monitor your daily sales activity to your inventory on-hand.
Profit growth does not necessarily mean more cash on hand. Profit (or net income) is the difference between your company’s total revenue and its total expenses. It measures how efficiently your business is operating. Cash flow measures your company’s liquidity (the ability to pay bills and other financial obligations on time). You cannot spend profit; you can only spend cash to pay suppliers, employees, the gov¬ernment, and lenders.
Many small business owners have discovered that profitability does not guarantee liquidity. Over time, your company’s profits are of little value if they are not accompanied by a positive net cash flow. To create a positive net cash flow, generate more cash and collect the cash in a more timely manner and at the same time, maintain or reduce your expenses. The four ways that can help your company to generate more cash, are:
1. Increase sales by attracting new customers. Your business cannot sustain itself without the addition of new customers. New customer acquisition is a process that combines market data with direct marketing tools to identify and reach high-potential prospects and convert those prospects into customers.
2. Increase sales by selling additional product/services to existing customers. It is far less expensive to generate additional business from your existing customer base than it is to generate new business from new customers. A regular review of your customers’ buying history and frequency of purchases can reveal some interesting facts about your customers’ buying habits.
3. Generate more cash from each dollar of sales. More cash is generated because of increased profit margins made possible by increasing selling prices and reducing costs of goods sold.
4. Reduce overhead. Overhead costs generally include facilities, equipment, administrative and management personnel. The key is to produce a larger volume of business at a lower cost.
Ideally, during your business cycle, money flowing into your business should be greater than money flowing out of it. The buildup of a surplus cash balance is important because it enables you to plug cash flow gaps when necessary, to pursue expansion initiatives, and to reassure lenders and investors that your business is in good financial health.
Copyright © 2008 Terry H. Hill
You may reprint this article free of charge in your newsletter, magazine, or on your website, provided that the article is unedited, and that the copyright, author’s bio, and contact information below appears with each article. Articles appearing on the web must provide a hyperlink to the author’s web site, http://www.legacyai.com
To download a copy of this article, click on this link:. http//www.legacyai.com/Article__Cash_Flow.html
By: Terry H. Hill
About the Author:
Positive cash flow does not happen by accident; it happens because a well-defined financial management technique called “cash management” is functioning. A good cash management system helps to efficiently and effectively manage the activities that produce cash. Maintaining an optimal level of cash that is neither excessive, nor deficient is of the upmost importance. Accelerating cash inflows wherever possible is a mandatory practice. Two activities that accelerate cash inflows include invoicing customers as quickly as possible and collecting cash on past due accounts. Delaying cash outflows until they come due is a critical step in good cash conservation. Negotiating extended payment terms with suppliers also delays cash outflows. In addition, investing surplus cash to earn the highest rate of return is a good business practice.
In order to understand the magnitude and timing of cash flows, plotting cash movement, with the use of cash flow forecasts, is critical. A cash flow forecast provides you with a clearer picture of your cash sources and their expected date of arrival. Identifying these two factors will help you to determine “what” you will spend the cash on, and “when” you will need to spend it.
Your financial reporting documents should include an Income Statement, a Balance Sheet and a Statement of Cash Flows. Your “cash flow forecast” reflects the same three types of cash flow activities that appear in your Statement of Cash Flows. The three types of cash flow activities are:
• Cash Flows from Operating Activities: This is the cash flow that is generated which is the direct result of the sales of your product/services.
• Cash Flows from Investing Activities: This is the cash flow that is generated from non-operating activities, such as, investments in plant and equipment or other fixed assets.
• Cash Flows from Financing Activities: This is the cash flow that is generated from external sources— lenders and investors.
These three types of cash flow activities are interrelated. They depend on, and affect each other. The cash flow forecast should take this into account, and provide a complete picture of where cash will come from and how it will be used for the period being forecasted. The relationships between the different cash flow activities may depend on the nature of your business, the stage of development of your business, as well as, general economic conditions, or conditions within the market or industry in which your business operates.
Cash outflows and inflows seldom occur together. In most cases, cash inflows seem to lag behind cash outflows, leaving your business short on cash. This shortfall is your “cash flow gap.” The cash flow gap is the period (number of days) between your business payment of cash for goods and services purchased, and the receipt of cash from your customers for goods or services sold. In other words, inventory days on hand + receivables collection period – accounts payable period = the cash flow gap. This interval, the cash flow gap, must be financed. Keep in mind the fact, that for each day your cash flow gap is extended, so too is the amount of interest being accrued. Even when interest rates are low, the cost of financing can add up quickly.
Here are three ways your company can narrow its cash flow gap:
1. Stretch out your payment terms on purchases for inventory. In most industries, payment terms are largely determined by tradition and vary from industry to industry.
2. Shorten the collection period. The faster your company can collect money for products and/or services sold, the smaller its cash flow gap will be.
3. Increase inventory turnover. The faster your company moves inventory, the less cash it needs. The key to managing inventory successfully is to continuously monitor your daily sales activity to your inventory on-hand.
Profit growth does not necessarily mean more cash on hand. Profit (or net income) is the difference between your company’s total revenue and its total expenses. It measures how efficiently your business is operating. Cash flow measures your company’s liquidity (the ability to pay bills and other financial obligations on time). You cannot spend profit; you can only spend cash to pay suppliers, employees, the gov¬ernment, and lenders.
Many small business owners have discovered that profitability does not guarantee liquidity. Over time, your company’s profits are of little value if they are not accompanied by a positive net cash flow. To create a positive net cash flow, generate more cash and collect the cash in a more timely manner and at the same time, maintain or reduce your expenses. The four ways that can help your company to generate more cash, are:
1. Increase sales by attracting new customers. Your business cannot sustain itself without the addition of new customers. New customer acquisition is a process that combines market data with direct marketing tools to identify and reach high-potential prospects and convert those prospects into customers.
2. Increase sales by selling additional product/services to existing customers. It is far less expensive to generate additional business from your existing customer base than it is to generate new business from new customers. A regular review of your customers’ buying history and frequency of purchases can reveal some interesting facts about your customers’ buying habits.
3. Generate more cash from each dollar of sales. More cash is generated because of increased profit margins made possible by increasing selling prices and reducing costs of goods sold.
4. Reduce overhead. Overhead costs generally include facilities, equipment, administrative and management personnel. The key is to produce a larger volume of business at a lower cost.
Ideally, during your business cycle, money flowing into your business should be greater than money flowing out of it. The buildup of a surplus cash balance is important because it enables you to plug cash flow gaps when necessary, to pursue expansion initiatives, and to reassure lenders and investors that your business is in good financial health.
Copyright © 2008 Terry H. Hill
You may reprint this article free of charge in your newsletter, magazine, or on your website, provided that the article is unedited, and that the copyright, author’s bio, and contact information below appears with each article. Articles appearing on the web must provide a hyperlink to the author’s web site, http://www.legacyai.com
To download a copy of this article, click on this link:. http//www.legacyai.com/Article__Cash_Flow.html
By: Terry H. Hill
About the Author:
An author, speaker, and consultant, Terry H. Hill is the founder and managing partner of Legacy Associates, Inc., a business consulting and advisory services firm based in Sarasota, Florida. A veteran chief executive, Terry works directly with business owners of privately held companies on the issues and challenges that they face in each stage of their business life cycle. Terry is the author of the business desk-reference book, How to Jump Start Your Business. He hosts the Business Insights from Legacy Blog at http://blog.legacyai.com and writes a bi-monthly eNewsletter, “Business Insights from Legacy eZine.”
By signing up for Business Insights from Legacy eZine at http://www.legacyai.com/Business_Insights_eZine.html you can keep abreast of the latest tips, tactics, and best business practices. You will, also, receive the free eBook, Jump Start Your Knowledge of Business.
Contact Terry by email at http://www.legacyai.com or telephone him at 941-556-1299.
Rick Westall
What are some different ways to estimate cash flow?
dasielady asked:
I work in the accounting department at a large law firm. I have some ideas on how to estimate cash flow in the coming year, but would like more suggestions. One way I am already doing is an excel spreadsheet that will examine the aging on recievables from last year, and the amount uncollected. Then take those percentages of beginning A/R (ie: what % of Januarys recievables were collected in Jan, then Feb, then Mar, then written off) and apply them to projected billables for the coming year. Does anyone have any other good suggestions?
Cassandra
I work in the accounting department at a large law firm. I have some ideas on how to estimate cash flow in the coming year, but would like more suggestions. One way I am already doing is an excel spreadsheet that will examine the aging on recievables from last year, and the amount uncollected. Then take those percentages of beginning A/R (ie: what % of Januarys recievables were collected in Jan, then Feb, then Mar, then written off) and apply them to projected billables for the coming year. Does anyone have any other good suggestions?
Cassandra
Cash flow statement, loss yet positive cash flow from operations?
Andrew Z asked:
For a cash flow statement, Is it possible for a company to record a loss and yet have a positive cash flow from operations? Can explain?
Roman Kann
For a cash flow statement, Is it possible for a company to record a loss and yet have a positive cash flow from operations? Can explain?
Roman Kann
Why should cash flow be a problem if an entity is making a reasonable accounting profit and how can cash flow?
George I asked:
How can cash flow be made more favourable?
Antonietta Hineline
How can cash flow be made more favourable?
Antonietta Hineline
Cash in Balance sheet does not reconcile ending balance of Cash Flow Statement-implication and reason?
Afzal K asked:
If Cash and Cash equivalents value is a positive figure in Balance sheet for year ending period and Cash flow statement ending balance(sum operations-investing-financing activities) which is negative and netting it off with cash at begining of the year results in a negative value which is different from one posted in Bsheet then what is the implication and if that is a normal practice then what is the reason..
Luke Lacasa
If Cash and Cash equivalents value is a positive figure in Balance sheet for year ending period and Cash flow statement ending balance(sum operations-investing-financing activities) which is negative and netting it off with cash at begining of the year results in a negative value which is different from one posted in Bsheet then what is the implication and if that is a normal practice then what is the reason..
Luke Lacasa