It applies to you, in your personal and business life, gone is the days you just had cash in your wallet to manage.
I had a client where the son had to step in for the father while he was sick. Staff was shouting “pay this”, “pay that” and it was a press of a button and they made the payments.
VAT was due in a few days! when I stepped in, stop!
Steps to managing your cash flow – Know what is coming in and what is going out.
1 – Make a list of all your debit orders and the dates that they get deducted from your bank account.
2 – Make a list of all your regular variable payments that you need to pay, e.g Telkom, Vodacom etc.
3 – Check the dates that they are due on.
4 – If you are taking on new debit orders, ask the supplier what payment dates are available.
5 – The same applies for regular payments, e.g school fees.
Remember as a sole proprietor and small business we don’t receive a salary or a fixed amount on one day.
Now that we have a list with amounts and dates, see a simple schedule is available at www.thebookkeepingcompany.co.za/business resource.
Check the due dates on all. If you are taking on new debit orders ask them what dates are available for payment. Even your regular payments, personal payments e.g school fees.
I had a client who would tell me on which payment run he was going to pay me. Ha? Yes, he set 3 payment runs, a month.
- The first of the month – was for debit orders from the suppliers that insist your debit order go off on the 1st.
- The 7th of the month
- The 15th of the month
If you look at the due dates on Telkom and the City of Cape Town invoice they have a due date., schedule them to one of the above.
Now, you have a list, you have scheduled payment dates, made your paydays.
Cash -flow - Now we look for future changes because nothing stays the same. Surprises are stressful.
1 - Take note of the month your Annual Increase to your Insurance, security, rent etc. is in.
2 - Make a note when your Car Licence, Drivers Licence, Staff Drivers Licence is due and payable
3 - Add a note when your Annual Service Fees are due on your credit card
You will be able to determine what they are. Have a look at your Income Statement from the previous 12 months.
Saving for expenses
I am reading a book by “Mike Michalowicz - Profit First”, which opens my eyes to the way my mom and Gran did things in the old days. My Mom ran the financial side of the business of my Dad's business - very well.
Instead of waiting to pay your salaries at the end of the month, and hoping there is going to be money to pay the salaries. Open a bank account (savings) and each week put away 25% of your monthly payroll or put a percentage away daily.
Your Credit Card, if you have one has two dates on it.
- The Statement date, interest, and penalties will be charged on this day.
- The due date for when payment is to be made.
You will have read that you need to schedule your payments, well you can manage your credit card too.
Contact your bank - Card division and ask them to change the date your credit card statement runs on. If your statement date is the 5th (the last day to shop for the month). Your payment due date will be 25 days after, so the 30th of the month. If you want to make the payment due date the 7th, ask them to change the statement date to the 12th or 13th of the month. Ensure you pay the full amount due on this day to avoid those lovely interest and penalties.
In Conclusion – spread your payments over the month – schedule them – it's your money-manage it. Tips to Managing your cashflow – Part 3 coming soon.
Need assistance with managing your cashflow Cherine@the Bookkeeping Company.co.za