Planning Cash Flow

Do you have a Cash Flow Management strategy?

Planning Cash Flow is an important area of business management.

Otherwise known as cash flow management. It seems simple, but far from simple.

You may not be too worried about only having a few thousand dollars in the bank, but lenders, suppliers, and others extending credit worry.

Cash flow provides potential lenders with a picture of your business’s financial capacity to pay back a loan or credit terms. To give them comfort that your business will bring in enough money to cover the costs of any current financial obligations, as well as the cost of a new loan.

Most financing requests are that are denied are due to company Cash flow historical data.

Cost-benefit analysis

Taking a close look at money-in and money-out helps you to better understand how cash flow is affected. You also will have a better handle on Profit & Loss reports.

It is important that you categorize expenses to make determinations between development and operations to recurring and nonrecurring costs. This will help you recognize strengths and weaknesses in the business. Overall decision-making will improve from understanding the data. 

“A CBA is a technique for making non-critical choices in a relatively quick and easy way. It simply involves adding money in benefits and money in costs over a specified time period, before subtracting costs from benefits to determine success in terms of dollars.” – SBA

Cash Flow for Financing

There are a number of items that providers, lenders and suppliers look at for financing. Some lenders do not require all these areas, but the closer you get to institutional lending these will be required. 

The top items are as follows:

  • Age of the Business
  • Registration with State (LLC, Corp, S-Corp, etc.)
    • Must be in Good Standing
  • Cash Flow (Current, Historical)
    • Business Bank Statements (up to 12)
  • Business Tax Reports
    • Up to three years
  • Personal Tax Reports
    • Up to three years
  • Consumer Credit Report
  • Business Credit Reports

Some or all of these areas may impact the decision on your financing. If you need a free consultation, contact our team at [email protected] 

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