Lesson 3 – What to Do in a Short Term Cash Flow Crisis

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We’ve all been there. That cash flow crunch, where you aren’t sure if you can make payroll. Or you have bills that need to be paid, but you’re not sure how you’re going to be able to cover them. My Cash Flow Projections will help you plan out your long term cash flow strategy, but what do you do in a pinch?

This is what I’ve done both for myself, and for my clients.

First you’re going to update your banking.

Then you run the balance sheet to see the most current info on what your true balance is.

You might want to run an uncleared transactions report to see if you really have more money in the account, than what the Balance Sheet shows. If you have old uncleared checks outstanding, you can probably add those back to the balance. It’s not likely they’re going to clear. While you’re at it, you should research those to see how you should handle them.

Then key the total cash you have into the short term template.

From there it’s simple.

Key in things like your next payroll.

Other payments that you know are coming out.

Check Bill.com money out clearing, and key in anything that may be coming out, which hasn’t hit the bank account yet.

The template will show you the net cash on hand, so you can make sure you’re covered.

Then there is a section to include money you know is coming in. Be careful here. Do NOT include money someone has promised they are sending. As soon as you decide to include something like that, is when the most reliable of people will fail you. Only include money you know is coming in without the possibility of failure. A credit card payment that was processed, and hasn’t hit the bank account yet. A check you just deposited today. Those sorts of things you know you can count on.

Next there is another area for money out. This is for additional non-priority items that you would like to pay. As you put together this analysis you can see what can be paid.

I actually use this pretty often. My goal is never to have to pull money out of my personal account, but sometimes I have to. This template really helps me do my short term cash flow planning on the fly.

Alongside this analysis, I have my savings calculation. There are lots of people out there with all kinds of fancy formulas and systems, and you can pay a LOT of money for them. I like to keep it simple. 10% of every gross dollar that comes in, needs to go to savings. I don’t always have the cash to do it, so I track where I am vs where I need to be. This way I always have a number in mind, in terms of what needs to be transferred.

Then when I am thinking about spending money, and I know I haven’t transferred everything I should have by now, into savings, then that spending decision is made much more carefully.

For $25 & Up members, I will paste the link to this template in Slack. If you haven’t accepted the invite into Slack yet, let me know and I will re-send your invite.

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Lesson 2 – Accounts Receivable – Another Way to Project Collections

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There are times, when you want to be more specific about which receivables will be collected, and when. This becomes even more important if you have a lot of receivables, and if you have many clients that are typically slow to pay.

This video will show you how to take a report from QuickBooks Online that lays your receivables out in a way that lends itself perfectly to putting your collections on a timeline. Then I’ll build it out for you, so you can see, how you can plot out exactly which month, every receivable will be collected in.

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Lesson 1 – Remarkable Reports For Bookkeepers – ST Cash Flow

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There are things we can do as service professionals to really WOW the customer. The term “remarkable” means it’s worthy of being remarked about. If you simply do what’s expected that’s not remarkable. When you go way above and beyond what the client ever expects, that’s remarkable.

This course is about creating remarkable reports, and it’s meant to help accounting and bookkeeping professionals go those few extra steps, to wow your clients, by delivering reports that are easy to understand, and which really help the client get access to valuable information, quickly.

Of course, if you’re a business owner, then this course has it’s benefits for you too! You’ll just be creating these reports for yourself.

The first lesson is my famous, short term cash flow report. This is not a full cash flow projection. This report is what I like to refer to as a “check register” projection. In the video, I am going to show you how to set up a dynamic spreadsheet, based on reports you run in QuickBooks Online, and export to Excel.

When you are finished with the setup, you will have a system that will let you plug in the amounts of your outstanding bills to be paid, along with dates when you expect your receivables to come in. Those amounts will carry back to your check register tab, and show you what your cash in bank will look like, based on the scenario you’ve created.

This makes it so that in a glance, you can revise that scenario, to get the desired outcome. This is important, when it comes to managing cash flow, and every business owner that I’ve every worked with will be immensely grateful, that you’ve done this for them.

This is the kind of thing that we can easily do for our business owner clients, who don’t necessarily want a course in reading financial statements. The idea here, and throughout the rest of this course, is to take the technical knowledge that we have, and use it to lay out our clients financial information in a way that makes perfect sense to them.

 

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