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Cash Flow Confidence

Updated: Dec 4, 2021

A positive cash flow is key for survival and success, and why not dare to say confidence. Cash Flow Confidence can show in different ways for different business owners:

  • Having an emergency fund or a 3-month runway

  • Not relying on expensive loans for expansions

  • Paying Business Liabilities on time

If your business is seeing regular fluctuations to negative balances or being "in the red" constantly, and your vendors are getting paid consistently late these are seven questions to ask yourself:

1. Are we bringing enough sales?

2. Are we spending too much?

3. Are we expanding too quickly?

4. Are we financing another business with the existing business?

5. Are we not clear about how much I/ we (shareholder/s) should get paid?

6. Do we not have agreements with vendors/clients?

7. Do we mix business and personal expenses in the business accounts?

Oftentimes examining the answers to these sensitive questions is a complicated task. We get in the way of our own success and put off building our long-term goals. No stress though! Here we give you some #tips to address your cash flow woes one step at a time.

Tips to improve your Cash Flow Confidence:

1. Examine your invoices' payment terms. Are you Due on Receipt? Are you giving clients enough notice and information of when they expect to receive an invoice so to ease the payment process? Think about making it easier for customers/clients to pay you on time via Credit Card payments.

2. Review your expenses: Start by looking into your recurring expenses - are you using those services? Can you go without any of them?

3. Renegotiate payment terms with our vendors. There are many advantages to long-term relationships and this could be one of them.

4. Understand your business' liabilities with CRA. Are you behind filing, remitting payments? Log in to your CRA business account to see if there are any balances owing. There will be a zero balance owing if your business is behind filing source deductions, GST/HST, or corporate taxes.

5. Stop using your business account as an ATM to fund your family trips, makeup (unless you are a make-artist),

6. Get your books in order. Without up-to-date books, it is very hard to deconstruct or break down what needs to change. If you do not have a solid #bookkeeping process, you should look into hiring an experienced bookkeeper to get your books to.

7. Find an experienced Accounting team to help you identify systematically the solutions and develop a plan of action for Tips 1 to 5.

Get your own Cash Flow Health Score. This health score will assess how soon you get paid on average, as well as how soon you pay your suppliers on average - This will allow us to see if the cash available is enough to carry the business through with business as is. With this starting point, we can start modifying scenarios and planning so that your business is out of the red. As your accountability partner, we will follow up with you so that you stay on track, and we can strategize together and prioritize accordingly.

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