How To Manage Your Businesses Cash Flow – Cash Flow Management

Make sure your financial statements are put together correctly – balance sheet balances, cash flow ties in with the balance sheet and the income statement. This is a skill just like fixing your car. If you don’t know how to do it, do bluff – hire someone to build the statements for you. This does not have to be an expensive accountant or consultant. You can probably find a local MBA finance student who can do it for you as long as you provide the appropriate numbers.

Total depreciable long term assets stood at $ 87.2 Billion in December 2005. At current pace, Comcast will finish depreciating its long term assets eighteen years from now! This assumes no new capital expenditure. The cold hard truth is that the companies spend $ 3.62 Billion of capital expenditure during the same period.

A business owner must know how much cash flow is available on a daily basis. If you don’t know this you are heading for disaster. Because even if it seems to be a lot of cash coming in, you may very well have a lot of expenses that have crept in over the last few months. Every real business owner knows how much cash he has at all times. The business owner should look at his or her cash flow examples, Balance statement and Profit and Loss Statement weekly in most cases. Most business owners never do and then panic when things “all of a sudden” go haywire with the business.

Establish a relationship with a bank that offers small business loans. Open a company checking account, after a few months see if the bank will offer overdraft protection.

When using P&L to determine rent, there are three different ways to achieve this. Cash flow is one option, which uses the actual rent paid to create the rent costs. GAAP rent can be used to determine P&L, as well, if the property experiences decreases or increases. However, when using GAAP rent it is important to only do so if the changes are a fixed. The third way is referred to as Effective rent. It is calculated by taking the the base rent and averaging it with any free rent units or properties. The useful thing about using Effective rent is it is reflected on the P&L with increased add, so the bottom line can appear higher.

Hire an accredited inspection firm to come in person and inspect the property you are considering. Do not overlook or skimp on this important step. It is imperative that the condition of the house be assessed, including its roof, fixtures, foundation, walls, and plumbing, heating, and electrical systems. Professional house inspectors will also look out for problems indigenous to that housing area, like termite, flood, or earthquake damage.

A company’s stock price is driven by earnings growth over the length of time. Occasionally earnings can occur when cuts are made, but in the end, increased revenues have to increase if earnings are to keep escalating. A good sign of a company is when they are increasing their revenues. When a company has ‘flagging sales’, it could be a sign of trouble for the future. Earnings growth says the company is making more than enough to combat their cost of operation. Well established companies need to show consistent results. Younger companies tend to display strong revenue growth with little or no earnings.