Success leaves clues
On a typical day, many people drop kids off at school and go directly to the nearest coffee drive-thru, get to the office, leave to pick up lunch, get back to their desk, then leave again to pick up those kids, run an errand or two, arrive at home and begin sinking into the events of the evening. Maybe this includes some relaxing online shopping, maybe not.
We each have our own recurring schedules for any given day. Yours may or may not follow this specific schedule. But at some point, most days, we all have multiple opportunities in a day to decide to save or spend our cash.
In your business life, this is referred to as investing and operating; both can have positive and negative transactions. Tracking these activities determines your Cash Flow situation. It allows you to see the increases or decreases in the amount of money your business has at any given time.
The classic saying, “you need to spend money to make money,” illustrates this concept well. An organization must spend funds on goods, labor, rent, etc., to be able to create goods and services to be sold. In this way, creating a flow of cash to and from your accounts creates the forward movement you are looking for, where you take in more cash than you spend.
Creating forward movement as your company creates goods and services is either in exchange for goods and services that make our business running and keep our lives moving forward.
// Three types of Cash Flow //
Operating: generated from normal business activities from revenue & expenses Investing: generated from investing activities: from acquiring or selling assets, such as investments, property, or equipment
Financial: generated from external activities such as borrowing money and debt repayment
Do you need to track it all yourself? No… but it is always good to know what numbers to look at and what they mean when you speak with your in-house or outsourced financial team. Your trusted bookkeeper can create simple, organized reports of your spending that show trends over time.
Combined with a few others, you can ask yourself questions like: Do you tend to need more of a specific supply during the winter months and not the summer ones? Are you getting the best deal on the services required to run your business? Should you choose to invest in a bigger or smaller workspace?
Answering these questions as you review your cash flow report will allow you to see a complete picture of the health and balance of your business and will enable you to make better decisions to grow wisely.
When you need help, Benay Enterprises is equipped to point you in the right direction with our growing list of bookkeeping and administrative services.
Have a wonderful day,
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