May 12, 2025 • 31 mins
Feeling that Friday payroll panic? Landed a big client but worried about upfront costs? You're not alone! In this essential episode, your host Stephanie Blaine from Balanced gets real about cash flow – the money moving in and out of your business – and why understanding it is your superpower. Forget complicated jargon; we're breaking down the everyday cash flow headaches and giving you actionable steps to take control, starting today!
What You'll Learn:
- [1:01] The Cash Flow Reality Check: Understand the simple definition of cash flow (money in MINUS money out) and why it's the heartbeat of your business.
- [4:03] Common Cash Flow Nightmares (and how to recognize them): Inconsistent income, surprise expenses, and the dreaded slow-paying clients – sound familiar?
- [8:58] Why Cash Flow Trumps Everything (even profit!): Discover the shocking statistic about why most businesses fail (hint: it's often NOT what you think).
- [16:14] Your Cash Flow Action Plan: Practical Bookkeeping Habits:
- [16:40] Know Your Numbers: The non-negotiable first step – keep those books updated!
- [18:03] See the Future with a Cash Flow Forecast: Your simple plan for upcoming income and expenses.
- [19:33] Get Paid Faster, Seriously: Smart invoicing and follow-up strategies.
- [22:47] Spend Smarter, Not Just Less: Negotiating, staggering bills, and cutting the fluff.
- [25:05] Build Your Business Safety Net: The Cash Cushion.
- [26:29] Tech Tools to Save the Day (and your sanity).
- [27:38] Pricing & Inventory That Support Cash Flow.
- [29:15] Your Role vs. Your Bookkeeper: The Ultimate Cash Flow Team.
- [30:35] Key Takeaways: Your Cash Flow Cheat Sheet.
Ready to Take Control?
- Free Cash Flow Clarity Call: Book your no-pressure consultation with Starlight Bookkeeping today!
- Visit Starlight Bookkeeping: Learn more about how we can help your business thrive.
- Don't Miss Out: Subscribe to Balanced for more practical business insights!
- Spread the Word: Share this episode with a fellow entrepreneur!
Want more tips on balancing business and life? Follow me on Instagram for insights on bookkeeping, business, and everything in between!
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Steph Blain (00:40):
Hey there, and welcome back to the show.
I'm your host, Stephanie Blaine,and I am so happy you're joining
me today because we are going todive into a topic that is
absolutely vital for yourbusiness success, which is
cashflow.
Now, before you hit skip, let meassure you, I'm gonna make this
as clear and exciting as I can,and I think it will be worth it.
(01:01):
Think of this as a friendly chatabout money flowing through your
business and how you can makethat flow steady and strong.
So, first, let's imagine somescenarios you are checking your
business bank account on aFriday, heart pounding, hoping
enough money is in there tocover Monday's payroll.
Or maybe you've just landed abig client, but you realize you
have to spend cash up friend onsupplies, but wait weeks to get
(01:24):
paid.
Does any of this sound familiar?
If you've ever felt that knot inyour stomach about making ends
meet for your business, you aredefinitely not alone in this.
Managing cashflow is one of themost common headaches for
business owners.
According to a QuickBook survey,61% of small business owners
regularly struggle with cashflowissues.
(01:45):
The good news is that cashflowis something that you can
control with the right steps.
In this episode, we're going todemystify cashflow in plain
English.
I'll share relatable examples.
Even the awkward money momentswe all face, and some powerful
stats that might surprise youand actionable tips to help you
take charge of your cash flow.
Starting today, by the end ofour chat, you'll understand what
(02:08):
cash flow really is.
In simple terms, why it's socrucial for your business'
health and even survival, andhow poor cash flow can lead to
piling on debt and practicalbookkeeping habits to keep your
cash situation under control.
We will also clarify the rules,what you, the business owner
should focus on versus what abookkeeper can handle when
managing cash flow.
(02:29):
And stick around because I'llwrap up the key takeaways and a
special invitation for a freeconsultation with Starlight
Bookkeeping to help you keepthis momentum going.
So get comfy and let's getstarted on mastering your cash
flow in a way that feelsempowering rather than
intimidating.
Let's get into it.
First, let's strip away anyjargon and define cashflow in a
(02:50):
way that makes sense at itscore.
Cashflow is just a fancy termfor the money moving in and out
of your business.
Cash inflows are the moneycoming in from sales, client
payments, loans, investments,any cash that your business
receives, and cash outflow isthe money going out.
Rent, salaries, supplies, loanrepayments, every expense that
(03:12):
you pay out.
When more cash comes in, thengoes out, you have a positive
cash flow, which is awesome.
That's the goal.
But when more goes out, thencomes in.
You have a negative cash flow,which is not so great.
Why does this matter?
Because having a negative cashflow or running out of cash even
temporarily can cause bigproblems down the line.
(03:33):
If your outflow exceeds theinflow for too long, you might
struggle to pay your bills andmeet obligations.
You might be thinking.
But if my business isprofitable, I'm okay.
Right?
The thing is not exactly, youcan be very profitable on paper
and still have a cashflowcrunch.
Cashflow is all about thetiming.
(03:54):
Making sure that the cash youneed is there when you need it.
Another way to look at it.
Cash flow is like yourbusiness's financial heartbeat.
It tells you if money is movingthrough the system properly.
A strong, steady cash flow meansthat your business is healthy
and ready to grow.
An erratic cash flow or a weakpulse is a warning sign that
(04:14):
something needs attention.
So simply put cash, cashflowequals your money in.
Minus your money out over agiven period.
Positive cash flow gives youfreedom to pay expenses, invest
in new opportunities, and sleepbetter at night.
Negative cash flow means stress,maybe dipping into savings,
racking up debt, or in the worstcase scenario, closing up shop.
(04:37):
We definitely wanna help youstay in the positive territory.
And if you do dip negative onoccasion, which can happen even
in healthy businesses, you'llhave a plan to manage it.
Alright, so now that we knowwhat cash flow is, let's talk
about why managing it cansometimes feel like a
rollercoaster.
Every business owner, everysingle one, has felt some cash
(04:59):
flow pain at one time oranother.
Let's go through a few commoncash flow headaches and see if
any of these ring a bell foryou.
Inconsistent or seasonal income,one month, you're crushing it.
Sales are through the roof andcash is pouring in the next
month.
Crickets.
Maybe your business is seasonalor clients come in waves.
This income roller coaster canmake it really hard to plan.
(05:21):
Imagine if you are running anonline store and you have an
amazing holiday season in Q4,but then January and February
are painfully slow.
You might be flush with cashright after Christmas and then
struggle to cover expenses amonth later.
The ups and downs of income meanthat you have to be extra
careful in high revenue monthsto save for the slower months.
(05:43):
Surprise expenses, these arethose nasty surprises that seem
to come at the worst time.
The delivery vans transmissionsuddenly dies.
The storefronts furnace breaks,or an unexpected tax bill lands
in your mailbox.
Imagine if out of nowhere youhave to spend$5,000 on a
critical piece of equipment.
That needs to be repaired bytomorrow if you don't have that
(06:04):
cash on hand.
Panic sets in surprise expensesare cashflow killers because
they strike without warning, andif you're not prepared, they can
wipe out your cash reserves orforce you to scramble for funds.
Slow paying clients or lateinvoices.
This one is huge for many smallbusinesses.
You did the work, you sent theinvoice, and now you're playing
(06:25):
the waiting game.
Meanwhile, your bills and youremployees paychecks, they won't
wait.
When clients take 30, 60, oreven 90 days to pay, it creates
a serious cash crunch.
Imagine if you're a freelanceror a contractor who just
completed a$10,000 project.
That's great, but the clientpolicy is to pay.
In the next 60 days, so youwon't see that money for two
(06:47):
months.
How do you cover your rent andexpenses in the meantime?
You're effectively financingyour client's business while you
wait for your own money to comein.
It is frustrating and all toocommon because nearly one third
of businesses say that it takesthem more than 30 days to get
paid for the work that they'vealready done with an average
wait time of 29 days, that's amonth or more of waiting for
(07:09):
your cash that you've alreadyearned.
No wonders that cash coming inis a problem.
Perhaps you're nodding alongbecause you've experienced one
or all of these scenarios.
Inconsistent income makesplanning hard, surprise expenses
knock you off.
Balance slow payments, theychoke your cash inflow.
These are real painful issuesand these headaches don't just
(07:31):
hurt your bank account.
They can keep you up at nightwith so much worry.
If you've ever stared at theceiling at 3:00 AM wondering how
to juggle your finances, thenyou are not the only one.
The key point here is cashflowchallenges are common.
You're not bad at businessbecause you have cashflow
issues.
Most entrepreneurs face thesehurdles, but, and this is a big,
but the difference betweenbusinesses that merely survive
(07:55):
and those that thrive often comedown to how you manage these
cash flow challenges.
So if you've felt any of thispain, take a deep breath.
We're going to tackle it.
Next up, let's talk about whyunderstanding and managing your
cash flow is absolutely criticalfor the health of your business
and your sanity and what canhappen if you ignore it.
You might be thinking, allright, cashflow problems are
(08:15):
common, but is it really thatbig of a deal?
Can't I just deal with theseissues as they come?
Well, the thing is not reallybecause cashflow can make or
break your business.
It's not just me saying that thestatistics are pretty
eye-opening, and they show justhow critical cashflow management
is.
Cashflow is the number onereason that businesses fail.
One often cited stat that youmight have heard before is that
(08:38):
82% of businesses that fail, doso because of cashflow problems
or poor cashflow management.
It is not a lack of customers.
It's not poor products, butcashflow issues that take down
most businesses.
That's huge.
Even if you have a great productor strong sales, if you run out
of cash to pay your bills at thewrong time, your business could
(09:00):
be in jeopardy.
Many profitable businesses havegone under simply because they
hit a cash crunch and they justcouldn't ride it out.
Think of cashflow like the fuelin your car.
You might be a high performancemachine, your business might be
profitable, but if you run outof gas unexpectedly, it stops no
matter how great the engine is.
So by understanding your cashflow, you're effectively
(09:22):
ensuring that you've got enoughgas in the tank to keep moving
forward and reach those businessgoals.
So let's talk about theconsequences of poor cash flow
for a moment.
What happens if you consistentlyhave more cash going out than
coming in, or you're constantlyhit with those headaches that we
described and you don't get ahandle on them?
First off, you might not be ableto pay the bills.
(09:43):
The most immediate crisis is notbeing able to cover your
expenses on time.
If your cash is short, you mightpay bills late or sometimes not
at all.
There's a QuickBook survey thatshow that 32% of small business
owners have been unable to paytheir suppliers loans themselves
or employees because of cashflowissues at some point.
That's nearly a third ofbusinesses facing the
(10:05):
gut-wrenching situation ofdeciding who gets paid and who
has to wait.
Paying suppliers late can strainyour relationships and possibly
get you cut from criticalsupplies.
Paying loans late hurts yourcredit and racks up fees and not
paying yourself or your team.
That leads to burnout andresentment.
You can only go for so longwithout proper compensation,
(10:27):
before morale and productivitystart to tank.
Next is accumulating debt, andwe're talking about the bad kind
of debt.
When cash is tight, many ownersresort to credit cards,
emergency loans, or lines ofcredit to plug the holes.
Debt can snowball really quicklyand we'll talk more about good
versus bad debt in a moment.
But suffice it to say that usingthese high interest debt just to
(10:50):
survive is usually a sign ofcashflow problems.
It's one thing to take out aloan to invest in growth, like
buying new equipment that willpay for itself.
That can be a strategic use ofdebt, but bad debt taken on
because you can't pay your billsor you have to swipe the credit
card to make payroll.
That's typically unsustainable.
It can lead to a debt spiralwhere you're borrowing from one
(11:12):
source to pay another.
Digging the hole deeper anddeeper.
And if you've been there, youknow how stressful that can be.
Next is missed opportunities.
Poor cash flow doesn't just meanthat you're dealing with
negatives.
It also means that you mightmiss out on the positives if
you're barely scraping by.
You can't invest in growth orjump on golden opportunities.
(11:33):
Maybe a chance comes up to buyinventory in bulk at a discount
or to expand to a great newlocation, but you need cash
upfront to do this.
If you don't have the cash orthe confidence because of
cashflow issues, you're gonnahave to pass.
That's money left on the tablethat could have been yours if
only you had the cash to seizethe opportunity.
So cashflow problems not onlycause headaches, they literally
(11:56):
cost you growth.
Next is strain on personal lifeand health.
We can ignore the human aspectof all of this.
Money problems in business arestressful.
We mentioned that 69% lose sleepover it.
It can affect your mood, yourrelationships, and your ability
to focus on the bigger picture.
If every day you're firefightingcash issues, you're not spending
(12:19):
that energy on strategy,marketing, or innovation.
Over time, the stress can leadto burnout.
No one starts a business to bein a constant panic mode about
money.
Understanding cash flow is keyto breaking out of that anxiety
loop and gaining a peace ofmind.
And then in the worst case, ifcashflow issues get out of hand,
it can lead to the ultimate badoutcome, which is shutting down
(12:41):
the business when you literallycan't pay what needs to be paid
bankruptcy or closure looms.
It's a very last resort, butunfortunately it happens more
often than it should.
Again, that 82% stat shows justhow many failures tie back to
cash flow.
And here's another sobering one.
A survey in 2020 found that 86%of small business owners said
(13:03):
they'd have to take action, likecutting expenses or taking on
debt.
If faced with just a two monthrevenue loss and 17% said they
would have to shut downentirely.
In other words, most businessesdon't have a large enough cash
cushion, and a couple of roughmonths can be devastating
without a plan.
All right, so that's the heavystuff.
(13:24):
The takeaway is that cashflowmanagement isn't just
bookkeeping busy work.
It's a fundamental component tokeeping your doors open and your
business healthy.
The great thing is by being hereand by learning, you're already
taking a huge step to ensurethat you won't become one of
those stats that we mentioned.
You're making sure that yourbusiness can weather the storms
and grab the opportunities.
(13:46):
All right, so grab a pen or openyour notes app because we're
about to get into the actionitems.
These are the practical stepsand bookkeeping habits that will
help you master your cash flow.
The goal here is to make cashflow management a part of your
routine in a way that's simpleand effective and not
overwhelming.
Remember, even small change canmake a big difference over time.
(14:09):
So let's break it down.
Number one, keep your books upto date and know your numbers.
This is the foundation.
You can't manage what you don'tmeasure.
Make sure you're keeping trackof all money coming in and going
out of your business, ideallyweekly.
If you're using accountingsoftware like QuickBooks or
Xero, stay on top ofcategorizing and reconciling
(14:31):
transactions.
If you're not using any softwareyet, even a basic spreadsheet is
better than nothing, butinvesting in a good bookkeeping
system will pay off for you.
Updated books let you seepatterns.
Oh, every August my expensesspike because of that annual
insurance payment, things likethat.
By knowing your numbers, you cananticipate problems before they
(14:53):
bite.
Businesses that monitor theircashflow monthly have an 80%
survival rate, whereas thosethat only review it once a year
survive only 36% of the time.
That's a huge difference.
Regular check-ins act like earlywarning systems so that you can
take action early.
So the number one rule.
Is stay on top of yourbookkeeping either by doing it
(15:15):
yourself regularly, or by hiringsomeone to help.
It's a non-negotiable forhealthy cashflow.
Number two, create and use acashflow forecast.
Don't let the term forecastscare you.
Think of this as your cash plan.
A cashflow forecast is just asimple projection of your
inflows and outflows over thecoming weeks or months.
(15:37):
For example, list out all of thepayments that you expect to
receive and all the bills andpayments that you need to make
by the end of the week or month.
This lets you see into thefuture of your cash.
If you spot a month whereoutflows exceed inflows, you can
prepare, maybe shift in expenseor work to pull in a sale
sooner.
If you see a surplus, you canplan to set some aside.
(15:59):
Even a basic three monthforecast can be eye-opening.
There are many templates andtools that makes this easier,
and your bookkeeper can help setthis up.
Also, the key is to update itregularly as things change and
actually refer to it when makingdecisions.
It's much easier to ride thewaves of business when you can
actually see them coming.
(16:20):
No more being blindsided by abig expense or a slow month.
You'll already have it on yourradar.
Number three is speed up cashinflows or get paid faster.
One of the best ways to improvecashflow is to get your money in
sooner.
Here are a few tactics for thisinvoice immediately and clearly.
Don't wait to send invoices,invoice as soon as the product
(16:43):
is delivered or the servicescompleted.
Make sure your invoices areclear about the payment terms
and include easy paymentoptions, enforce payment terms,
and follow up.
If a client is net 30, politelyremind them on day 31 if you
haven't been paid.
Sometimes people genuinelyforget A friendly nudge can work
wonders.
(17:04):
Consider charging a late fee forchronic late payers.
Even a small percentage canincentivize timely payments.
Remember.
Late payments are a commonissue.
About 24% of small businessessay their customers are often
late in paying invoices.
So you're not being rude byfollowing up.
You're being a responsiblebusiness owner.
you can offer incentives forearly payment.
(17:26):
You might offer a smalldiscount, say 2% off if a client
pays within 10 days instead oftheir regular 30.
Some businesses find this veryeffective.
Sure, you give up a tiny bit ofrevenue, but you get the cash in
hand faster, which candefinitely be worth it in the
right circumstance.
It's a win-win.
The client feels that they got adeal and you benefit from
(17:47):
improved cash flow.
Required deposits or milestonepayments.
If you do large projects orlong-term work, don't wait until
the end to bill everything.
Ask for safe 30% upfront,another 30 halfway through, and
then the remainder atcompletion.
This way, you have some cash towork with throughout the project
and you're not leftempty-handed.
If the client vanishes, it istotally acceptable to structure
(18:11):
the payments this way.
Many clients actually expect it.
Multiple payment options.
The easier you make it forpeople to pay you, the faster
you'll get the money.
Consider credit cards, a CH,PayPal, carrier, pigeon,
whatever works for you.
And if you can set up automaticdeposits for reoccurring
invoices, even better.
(18:32):
If you invoice through an onlinesystem, include that Pay now
button.
This is going to be so helpfulfor you down the line.
Number four, manage and delaycash Outflows.
This basically just means spendsmart.
The flip side of the equation isyour expenses, and we wanna
control the cash going out,negotiate with your vendors.
(18:53):
If you have a good relationshipwith your suppliers, see if you
can get better payment terms.
For instance, I.
Pushing an invoice from due in15 days to due in 30 days
doubles the time that you haveto gather your cash.
Some suppliers might offer asmall discount for paying early.
Others might be fine with youpaying a bit later if you've
been a reliable customer.
It really just doesn't hurt toask stagger bill payments
(19:16):
instead of all the bills hittingat once.
See if you can spread them out.
Pay some bills at the beginningof the month, some in the
middle, some at the end,depending on due dates.
Align them with when.
Cash typically comes in for you.
Just be careful not to pay lateand incur fees or interest
because that's counterproductivepay on the last day that it's
due, not earlier.
(19:37):
If you need to conserve cash,here's something that I do in my
own business that's workedreally well for both me and my
clients since most of the work Ido is reoccurring monthly.
I've set up automatic payments.
When a client fills in theirpayment form, I let them choose
the day of the month that theywanna be charged.
It gives me predictable income,which is good for cash flow, and
(19:59):
they get to pick the day thatlines up best with their cash
flow.
It's such a win-win, and I getconsistency while they get
flexibility.
Cut unnecessary expenses.
Periodically review yourexpenses and see if there's
anything non-essential that youcan cut even temporarily
subscriptions or services thatyou no longer use, unused office
(20:20):
space trimming some fat can freeup cash.
This doesn't mean that youshould starve your business of
necessary expenses that help yougrow.
It just means eliminate thewaste.
Plan for big expenses.
If you know a significantexpense coming, like an annual
software renewal or an equipmentupgrade, a tax bill plan for it.
(20:41):
Set aside a bit each monthleading up to it.
That way it doesn't clobber yourcash all at once.
This is basically like a sinkingfund.
Not fancy.
It's just smart.
Number five, build a cashcushion or an emergency fund.
Just like personal financeexperts say, have an emergency
fund.
Businesses benefit from a cashreserve too.
(21:03):
The idea is to have a buffer ofa few months worth of operating
expenses in the savings accountor an easily accessible form.
That way if you have a suddencash flow issue, a big client
pays late, an unexpected expensehits, you can dip into the
reserve instead of scrambling orborrowing.
Start small.
Even one month of expenses savedis a great start over time, you
(21:25):
might build this up to three,four, or six months of runway.
It sounds like a lot, but chipaway at it in good months, put a
little extra aside.
This cushion gives you peace ofmind and options.
It turns potential disastersinto mere inconveniences.
Remember that stat, 86% ofbusinesses would struggle with a
(21:46):
two month loss of income.
By building a cushion, you putyourself in the resilient 14%.
It's a great goal to worktowards.
Number six is use tools and techto your advantage.
Don't try and do it all in yourhead or manually.
There are fantastic tools, manyaffordable or even free that can
help you with cashflowmanagement accounting software.
(22:08):
As mentioned before.
To track everything in oneplace.
Cashflow dashboards are appsthat connect you to your
accounting software andvisualize your cashflow in real
time.
Even a simple calendar withreminders for when big bills or
invoices are due can help youstay on top of timing.
If numbers aren't your thing,consider bringing in a
bookkeeping professional orusing a part-time CFO Service to
(22:30):
help you set up reports andexplain them to you.
It can take a huge weight offyour shoulders.
Number seven, price andinventory strategies.
If you sell products, a lot ofcash can get tied up in
inventory.
Be mindful not to overstock oninventory that sits for too
long.
That's cash sitting on a shelf.
Sometimes it's better to orderless, more frequently.
(22:53):
Also, make sure your pricing iscontributing to positive cash
flow.
If your margins are razor thin,even a little hiccup can cause a
cash flow crunch.
Occasionally review prices andcosts to ensure that you're not
inadvertently sabotaging yourcash situation.
Example, a product that you sellat$5 that costs you$4 and 90
(23:15):
cents in variable costs.
Might be profitable in volume,but one slow month and you're in
big trouble.
Maybe it should be priced at$6or something like that.
All right.
That was a lot of tips to avoidoverwhelm.
Let's think of these as a menuof actions.
You don't have to do everysingle thing all at once.
(23:36):
Even implementing a couple ofthese can start improving your
cash flow, for example.
Maybe you commit to updatingyour books every Friday and
sending out invoices immediatelyupon project completion.
That alone might cut yourpayment wait times and give you
clear insights.
Then you might say, okay, I'llset up a simple cash flow
forecast for the next eightweeks.
(23:57):
Do that, and suddenly you feeleven more on top of things.
Progress step by step.
The most important thing is tobe proactive.
The days of shoving receipts ina drawer and praying there's
enough in the account at the endof the month, they need to be
behind you.
Instead, you'll be driving thecash flow bus now, not just
riding it, and trust me, whenyou get in the habit of managing
(24:18):
cash flow, it starts to feelreally empowering.
You see the impact of yourdecisions more clearly.
Cashflow goes from being a scaryunknown monster to a familiar
aspect of your business.
It becomes manageable.
Now, you might be wondering,this is great, but it also
sounds like a lot of work Whichbrings us to an important point.
(24:40):
The role you play versus therole of a bookkeeper or a
financial helper can play inmanaging cash flow.
Let's break that down becauseunderstanding who does what can
make your life much easier.
As a business owner, you'relikely juggling a million
things, whether you're handlingsales, marketing, or customer
service.
Managing cash flow is a part ofyour job too, but you don't have
(25:01):
to do it alone.
Think of it like a team effort.
You lead the strategy and yourbookkeeper handles the daily
details.
So what is your role as thebusiness owner?
You are the cashflow captain.
That means understanding the bigpicture, how money is coming in,
what's going out and what'sleft.
You set the prices, decide onpayment terms, and make the big
decisions like when to cut costsor invest in something new.
(25:24):
If you're not crunching everynumber yourself, it's your job
to regularly check in and usethose numbers to guide your
choices.
Your bookkeeper's role is yourbehind the scenes partner.
They track and record everytransaction, reconcile your bank
accounts, send invoices, followup on payments, and keep your
books clean.
They also generate reports thathelp you spot trends and make
(25:47):
informed decisions.
Basically, they give you thedata and clarity that you need
to steer the ship confidently.
When both of you are doing yourpart strategy on your end and
precision on theirs, cashflowmanagement becomes so much
smoother.
You'll avoid surprises,shortages, stay on track with
your goals and feel way more incontrol of your business
(26:08):
Finances.
So let's take a moment to recapthe key takeaways, so this all
sinks in nicely, and then I'llsend you off with a bit of
encouragement and a fun littleinvitation at the end.
If you're ready for extrasupport, here are the essential
points from the episode.
Think of this as your cheatsheet moving forward.
Cashflow equals money in andmoney out.
(26:28):
This is the movement of cashthroughout your business.
Positive cash flow means more inthan out, and it's what you're
aiming for most of the time.
Negative cash flow, more moneyout than money in can happen,
but you need a plan for thoseperiods.
Remember, a business can beprofitable and still run out of
cash, so tracking when moneymoves is critical.
(26:51):
Common cash flow.
Challenges are manageable,inconsistent income, surprise
expenses, and slow payingclients are the big culprits
that cause cash flow stress.
You're not alone if these impactyou.
Most businesses face them, butthe key is anticipating and
mitigating their impact.
A slow season or a late invoicedoesn't have to spell disaster.
(27:11):
If you see it coming and youprepare why it matters.
Cash flow is the lifeblood ofyour business.
Poor cash flow is a leadingcause of business failure.
It can force you into bad debt,strain your personal wellbeing,
and make you miss growthopportunities.
On the flip side, mastering cashflow sets you up for stability
and success.
(27:31):
Businesses that keep a close eyeon cash cashflow have a much
higher survival rate.
Knowledge is truly power.
Here we've also covered a wholetoolkit of strategies that you
can start using right now totake action and make real
improvements in your cash flow.
Keep your financial recordsupdated and accurate, either DIY
or with a bookkeeper's.
Help know your numbersregularly, review and even
(27:55):
forecast your cash flow so thatyou can anticipate these issues.
Speed up cash coming in.
Invoice fast.
Enforce terms, incentivize earlypay, diversify your payment
options, control cash going out,negotiate terms, cut unnecessary
costs, and time your paymentswisely.
(28:15):
Build a cash reserve whenpossible to cushion against
surprises.
Use tools and get help.
You don't have to do it manuallyor alone.
There's softwares andprofessionals like bookkeepers
that are always ready to help.
Each small improvement in theseareas can relieve pressure and
strengthen your cash position.
As for roles, you are thecaptain.
(28:36):
Bookkeeping is the co-pilot.
As the business owner, you steerthe strategy for cashflow making
decisions, planning and ensuringit's a priority.
A bookkeeper may handle theday-to-day details, keeping the
books, managing invoices andbills, and providing you the
data that you need, you worktogether to keep the cash flow
ship sailing smoothly.
(28:57):
If you don't have a bookkeeperyet, consider when might be the
right time to get one.
It can free you up and bringexpertise to your business if
you do have one.
Make sure you're trulyleveraging their skills and
insights.
Most importantly, remember thatmastering cashflow is a journey.
It's not a one-time task.
You don't have to be perfect.
Things will still pop up anunexpected expense.
(29:19):
A client who pays late, that'slife.
By implementing what you'velearned today, though, you'll be
so much better equipped tohandle those challenges.
Instead of reacting with panic,you'll respond with a plan, and
that is a huge confidencebooster as an entrepreneur.
Imagine if you no longer feltthat pit in your stomach every
time a bill arrives.
Imagine looking at your bankaccount and knowing that you've
(29:41):
got the next few months covered,plus a plan for the next several
after that.
Imagine being able to say yes toa great business opportunity
without worrying if you'll havethe cash to make it happen.
That's what solid cashflowmanagement can do for you.
It gives you freedom, options,and peace of mind.
You've got this.
It might take a little bit ofhabit building, but every step
(30:02):
you take to master your cashflow is a step towards stronger,
more resilient business, and youdon't have to do it alone.
If you're feeling a bitoverwhelmed or you're excited to
get control of your cash flow,but not really sure where to
start, we can take thisconversation a little bit
further.
I would love to invite you tobook a free consultation with
Starlight Bookkeeping.
This is a no pressure chat wherewe can talk specifically about
(30:25):
your business's cash cashflowsituation.
Whether you need help settingup.
Good bookkeeping systems,creating a cash flow forecast,
or just someone to brainstormideas with, we are here for you.
Sometimes a fresh set of eyesand a little guidance is all it
takes to turn things around andit's free, so why not?
You can find the link to book acall in the show notes, or you
(30:47):
can visit our websitewww.starlightbookkeeping.com.
Let's work together to make surethat your business' finances
shine as brightly as the passionyou have for your work.
Thank you so much for hangingout with me today and investing
this time in your business'sfinancial health.
Mastering cashflow is one of thebest gifts you can give to your
business and yourself.
(31:08):
I hope you're walking awayfeeling more empowered and
informed.
Keep that momentum going.
Take one of the tips from todayand put it into action this
week.
You'll be so glad you did.
Until next time, stay proactive,keep that cash flowing, and as
always, happy business growing.
Here's to your success and peaceof mind.
Catch you in the next episode.
Hey there, and welcome back to the show.
I'm your host, Stephanie Blaine,and I am so happy you're joining
me today because we are going todive into a topic that is
absolutely vital for yourbusiness success, which is
cashflow.
Now, before you hit skip, let meassure you, I'm gonna make this
as clear and exciting as I can,and I think it will be worth it.
(01:01):
Think of this as a friendly chatabout money flowing through your
business and how you can makethat flow steady and strong.
So, first, let's imagine somescenarios you are checking your
business bank account on aFriday, heart pounding, hoping
enough money is in there tocover Monday's payroll.
Or maybe you've just landed abig client, but you realize you
have to spend cash up friend onsupplies, but wait weeks to get
(01:24):
paid.
Does any of this sound familiar?
If you've ever felt that knot inyour stomach about making ends
meet for your business, you aredefinitely not alone in this.
Managing cashflow is one of themost common headaches for
business owners.
According to a QuickBook survey,61% of small business owners
regularly struggle with cashflowissues.
(01:45):
The good news is that cashflowis something that you can
control with the right steps.
In this episode, we're going todemystify cashflow in plain
English.
I'll share relatable examples.
Even the awkward money momentswe all face, and some powerful
stats that might surprise youand actionable tips to help you
take charge of your cash flow.
Starting today, by the end ofour chat, you'll understand what
(02:08):
cash flow really is.
In simple terms, why it's socrucial for your business'
health and even survival, andhow poor cash flow can lead to
piling on debt and practicalbookkeeping habits to keep your
cash situation under control.
We will also clarify the rules,what you, the business owner
should focus on versus what abookkeeper can handle when
managing cash flow.
(02:29):
And stick around because I'llwrap up the key takeaways and a
special invitation for a freeconsultation with Starlight
Bookkeeping to help you keepthis momentum going.
So get comfy and let's getstarted on mastering your cash
flow in a way that feelsempowering rather than
intimidating.
Let's get into it.
First, let's strip away anyjargon and define cashflow in a
(02:50):
way that makes sense at itscore.
Cashflow is just a fancy termfor the money moving in and out
of your business.
Cash inflows are the moneycoming in from sales, client
payments, loans, investments,any cash that your business
receives, and cash outflow isthe money going out.
Rent, salaries, supplies, loanrepayments, every expense that
(03:12):
you pay out.
When more cash comes in, thengoes out, you have a positive
cash flow, which is awesome.
That's the goal.
But when more goes out, thencomes in.
You have a negative cash flow,which is not so great.
Why does this matter?
Because having a negative cashflow or running out of cash even
temporarily can cause bigproblems down the line.
(03:33):
If your outflow exceeds theinflow for too long, you might
struggle to pay your bills andmeet obligations.
You might be thinking.
But if my business isprofitable, I'm okay.
Right?
The thing is not exactly, youcan be very profitable on paper
and still have a cashflowcrunch.
Cashflow is all about thetiming.
(03:54):
Making sure that the cash youneed is there when you need it.
Another way to look at it.
Cash flow is like yourbusiness's financial heartbeat.
It tells you if money is movingthrough the system properly.
A strong, steady cash flow meansthat your business is healthy
and ready to grow.
An erratic cash flow or a weakpulse is a warning sign that
(04:14):
something needs attention.
So simply put cash, cashflowequals your money in.
Minus your money out over agiven period.
Positive cash flow gives youfreedom to pay expenses, invest
in new opportunities, and sleepbetter at night.
Negative cash flow means stress,maybe dipping into savings,
racking up debt, or in the worstcase scenario, closing up shop.
(04:37):
We definitely wanna help youstay in the positive territory.
And if you do dip negative onoccasion, which can happen even
in healthy businesses, you'llhave a plan to manage it.
Alright, so now that we knowwhat cash flow is, let's talk
about why managing it cansometimes feel like a
rollercoaster.
Every business owner, everysingle one, has felt some cash
(04:59):
flow pain at one time oranother.
Let's go through a few commoncash flow headaches and see if
any of these ring a bell foryou.
Inconsistent or seasonal income,one month, you're crushing it.
Sales are through the roof andcash is pouring in the next
month.
Crickets.
Maybe your business is seasonalor clients come in waves.
This income roller coaster canmake it really hard to plan.
(05:21):
Imagine if you are running anonline store and you have an
amazing holiday season in Q4,but then January and February
are painfully slow.
You might be flush with cashright after Christmas and then
struggle to cover expenses amonth later.
The ups and downs of income meanthat you have to be extra
careful in high revenue monthsto save for the slower months.
(05:43):
Surprise expenses, these arethose nasty surprises that seem
to come at the worst time.
The delivery vans transmissionsuddenly dies.
The storefronts furnace breaks,or an unexpected tax bill lands
in your mailbox.
Imagine if out of nowhere youhave to spend$5,000 on a
critical piece of equipment.
That needs to be repaired bytomorrow if you don't have that
(06:04):
cash on hand.
Panic sets in surprise expensesare cashflow killers because
they strike without warning, andif you're not prepared, they can
wipe out your cash reserves orforce you to scramble for funds.
Slow paying clients or lateinvoices.
This one is huge for many smallbusinesses.
You did the work, you sent theinvoice, and now you're playing
(06:25):
the waiting game.
Meanwhile, your bills and youremployees paychecks, they won't
wait.
When clients take 30, 60, oreven 90 days to pay, it creates
a serious cash crunch.
Imagine if you're a freelanceror a contractor who just
completed a$10,000 project.
That's great, but the clientpolicy is to pay.
In the next 60 days, so youwon't see that money for two
(06:47):
months.
How do you cover your rent andexpenses in the meantime?
You're effectively financingyour client's business while you
wait for your own money to comein.
It is frustrating and all toocommon because nearly one third
of businesses say that it takesthem more than 30 days to get
paid for the work that they'vealready done with an average
wait time of 29 days, that's amonth or more of waiting for
(07:09):
your cash that you've alreadyearned.
No wonders that cash coming inis a problem.
Perhaps you're nodding alongbecause you've experienced one
or all of these scenarios.
Inconsistent income makesplanning hard, surprise expenses
knock you off.
Balance slow payments, theychoke your cash inflow.
These are real painful issuesand these headaches don't just
(07:31):
hurt your bank account.
They can keep you up at nightwith so much worry.
If you've ever stared at theceiling at 3:00 AM wondering how
to juggle your finances, thenyou are not the only one.
The key point here is cashflowchallenges are common.
You're not bad at businessbecause you have cashflow
issues.
Most entrepreneurs face thesehurdles, but, and this is a big,
but the difference betweenbusinesses that merely survive
(07:55):
and those that thrive often comedown to how you manage these
cash flow challenges.
So if you've felt any of thispain, take a deep breath.
We're going to tackle it.
Next up, let's talk about whyunderstanding and managing your
cash flow is absolutely criticalfor the health of your business
and your sanity and what canhappen if you ignore it.
You might be thinking, allright, cashflow problems are
(08:15):
common, but is it really thatbig of a deal?
Can't I just deal with theseissues as they come?
Well, the thing is not reallybecause cashflow can make or
break your business.
It's not just me saying that thestatistics are pretty
eye-opening, and they show justhow critical cashflow management
is.
Cashflow is the number onereason that businesses fail.
One often cited stat that youmight have heard before is that
(08:38):
82% of businesses that fail, doso because of cashflow problems
or poor cashflow management.
It is not a lack of customers.
It's not poor products, butcashflow issues that take down
most businesses.
That's huge.
Even if you have a great productor strong sales, if you run out
of cash to pay your bills at thewrong time, your business could
(09:00):
be in jeopardy.
Many profitable businesses havegone under simply because they
hit a cash crunch and they justcouldn't ride it out.
Think of cashflow like the fuelin your car.
You might be a high performancemachine, your business might be
profitable, but if you run outof gas unexpectedly, it stops no
matter how great the engine is.
So by understanding your cashflow, you're effectively
(09:22):
ensuring that you've got enoughgas in the tank to keep moving
forward and reach those businessgoals.
So let's talk about theconsequences of poor cash flow
for a moment.
What happens if you consistentlyhave more cash going out than
coming in, or you're constantlyhit with those headaches that we
described and you don't get ahandle on them?
First off, you might not be ableto pay the bills.
(09:43):
The most immediate crisis is notbeing able to cover your
expenses on time.
If your cash is short, you mightpay bills late or sometimes not
at all.
There's a QuickBook survey thatshow that 32% of small business
owners have been unable to paytheir suppliers loans themselves
or employees because of cashflowissues at some point.
That's nearly a third ofbusinesses facing the
(10:05):
gut-wrenching situation ofdeciding who gets paid and who
has to wait.
Paying suppliers late can strainyour relationships and possibly
get you cut from criticalsupplies.
Paying loans late hurts yourcredit and racks up fees and not
paying yourself or your team.
That leads to burnout andresentment.
You can only go for so longwithout proper compensation,
(10:27):
before morale and productivitystart to tank.
Next is accumulating debt, andwe're talking about the bad kind
of debt.
When cash is tight, many ownersresort to credit cards,
emergency loans, or lines ofcredit to plug the holes.
Debt can snowball really quicklyand we'll talk more about good
versus bad debt in a moment.
But suffice it to say that usingthese high interest debt just to
(10:50):
survive is usually a sign ofcashflow problems.
It's one thing to take out aloan to invest in growth, like
buying new equipment that willpay for itself.
That can be a strategic use ofdebt, but bad debt taken on
because you can't pay your billsor you have to swipe the credit
card to make payroll.
That's typically unsustainable.
It can lead to a debt spiralwhere you're borrowing from one
(11:12):
source to pay another.
Digging the hole deeper anddeeper.
And if you've been there, youknow how stressful that can be.
Next is missed opportunities.
Poor cash flow doesn't just meanthat you're dealing with
negatives.
It also means that you mightmiss out on the positives if
you're barely scraping by.
You can't invest in growth orjump on golden opportunities.
(11:33):
Maybe a chance comes up to buyinventory in bulk at a discount
or to expand to a great newlocation, but you need cash
upfront to do this.
If you don't have the cash orthe confidence because of
cashflow issues, you're gonnahave to pass.
That's money left on the tablethat could have been yours if
only you had the cash to seizethe opportunity.
So cashflow problems not onlycause headaches, they literally
(11:56):
cost you growth.
Next is strain on personal lifeand health.
We can ignore the human aspectof all of this.
Money problems in business arestressful.
We mentioned that 69% lose sleepover it.
It can affect your mood, yourrelationships, and your ability
to focus on the bigger picture.
If every day you're firefightingcash issues, you're not spending
(12:19):
that energy on strategy,marketing, or innovation.
Over time, the stress can leadto burnout.
No one starts a business to bein a constant panic mode about
money.
Understanding cash flow is keyto breaking out of that anxiety
loop and gaining a peace ofmind.
And then in the worst case, ifcashflow issues get out of hand,
it can lead to the ultimate badoutcome, which is shutting down
(12:41):
the business when you literallycan't pay what needs to be paid
bankruptcy or closure looms.
It's a very last resort, butunfortunately it happens more
often than it should.
Again, that 82% stat shows justhow many failures tie back to
cash flow.
And here's another sobering one.
A survey in 2020 found that 86%of small business owners said
(13:03):
they'd have to take action, likecutting expenses or taking on
debt.
If faced with just a two monthrevenue loss and 17% said they
would have to shut downentirely.
In other words, most businessesdon't have a large enough cash
cushion, and a couple of roughmonths can be devastating
without a plan.
All right, so that's the heavystuff.
(13:24):
The takeaway is that cashflowmanagement isn't just
bookkeeping busy work.
It's a fundamental component tokeeping your doors open and your
business healthy.
The great thing is by being hereand by learning, you're already
taking a huge step to ensurethat you won't become one of
those stats that we mentioned.
You're making sure that yourbusiness can weather the storms
and grab the opportunities.
(13:46):
All right, so grab a pen or openyour notes app because we're
about to get into the actionitems.
These are the practical stepsand bookkeeping habits that will
help you master your cash flow.
The goal here is to make cashflow management a part of your
routine in a way that's simpleand effective and not
overwhelming.
Remember, even small change canmake a big difference over time.
(14:09):
So let's break it down.
Number one, keep your books upto date and know your numbers.
This is the foundation.
You can't manage what you don'tmeasure.
Make sure you're keeping trackof all money coming in and going
out of your business, ideallyweekly.
If you're using accountingsoftware like QuickBooks or
Xero, stay on top ofcategorizing and reconciling
(14:31):
transactions.
If you're not using any softwareyet, even a basic spreadsheet is
better than nothing, butinvesting in a good bookkeeping
system will pay off for you.
Updated books let you seepatterns.
Oh, every August my expensesspike because of that annual
insurance payment, things likethat.
By knowing your numbers, you cananticipate problems before they
(14:53):
bite.
Businesses that monitor theircashflow monthly have an 80%
survival rate, whereas thosethat only review it once a year
survive only 36% of the time.
That's a huge difference.
Regular check-ins act like earlywarning systems so that you can
take action early.
So the number one rule.
Is stay on top of yourbookkeeping either by doing it
(15:15):
yourself regularly, or by hiringsomeone to help.
It's a non-negotiable forhealthy cashflow.
Number two, create and use acashflow forecast.
Don't let the term forecastscare you.
Think of this as your cash plan.
A cashflow forecast is just asimple projection of your
inflows and outflows over thecoming weeks or months.
(15:37):
For example, list out all of thepayments that you expect to
receive and all the bills andpayments that you need to make
by the end of the week or month.
This lets you see into thefuture of your cash.
If you spot a month whereoutflows exceed inflows, you can
prepare, maybe shift in expenseor work to pull in a sale
sooner.
If you see a surplus, you canplan to set some aside.
(15:59):
Even a basic three monthforecast can be eye-opening.
There are many templates andtools that makes this easier,
and your bookkeeper can help setthis up.
Also, the key is to update itregularly as things change and
actually refer to it when makingdecisions.
It's much easier to ride thewaves of business when you can
actually see them coming.
(16:20):
No more being blindsided by abig expense or a slow month.
You'll already have it on yourradar.
Number three is speed up cashinflows or get paid faster.
One of the best ways to improvecashflow is to get your money in
sooner.
Here are a few tactics for thisinvoice immediately and clearly.
Don't wait to send invoices,invoice as soon as the product
(16:43):
is delivered or the servicescompleted.
Make sure your invoices areclear about the payment terms
and include easy paymentoptions, enforce payment terms,
and follow up.
If a client is net 30, politelyremind them on day 31 if you
haven't been paid.
Sometimes people genuinelyforget A friendly nudge can work
wonders.
(17:04):
Consider charging a late fee forchronic late payers.
Even a small percentage canincentivize timely payments.
Remember.
Late payments are a commonissue.
About 24% of small businessessay their customers are often
late in paying invoices.
So you're not being rude byfollowing up.
You're being a responsiblebusiness owner.
you can offer incentives forearly payment.
(17:26):
You might offer a smalldiscount, say 2% off if a client
pays within 10 days instead oftheir regular 30.
Some businesses find this veryeffective.
Sure, you give up a tiny bit ofrevenue, but you get the cash in
hand faster, which candefinitely be worth it in the
right circumstance.
It's a win-win.
The client feels that they got adeal and you benefit from
(17:47):
improved cash flow.
Required deposits or milestonepayments.
If you do large projects orlong-term work, don't wait until
the end to bill everything.
Ask for safe 30% upfront,another 30 halfway through, and
then the remainder atcompletion.
This way, you have some cash towork with throughout the project
and you're not leftempty-handed.
If the client vanishes, it istotally acceptable to structure
(18:11):
the payments this way.
Many clients actually expect it.
Multiple payment options.
The easier you make it forpeople to pay you, the faster
you'll get the money.
Consider credit cards, a CH,PayPal, carrier, pigeon,
whatever works for you.
And if you can set up automaticdeposits for reoccurring
invoices, even better.
(18:32):
If you invoice through an onlinesystem, include that Pay now
button.
This is going to be so helpfulfor you down the line.
Number four, manage and delaycash Outflows.
This basically just means spendsmart.
The flip side of the equation isyour expenses, and we wanna
control the cash going out,negotiate with your vendors.
(18:53):
If you have a good relationshipwith your suppliers, see if you
can get better payment terms.
For instance, I.
Pushing an invoice from due in15 days to due in 30 days
doubles the time that you haveto gather your cash.
Some suppliers might offer asmall discount for paying early.
Others might be fine with youpaying a bit later if you've
been a reliable customer.
It really just doesn't hurt toask stagger bill payments
(19:16):
instead of all the bills hittingat once.
See if you can spread them out.
Pay some bills at the beginningof the month, some in the
middle, some at the end,depending on due dates.
Align them with when.
Cash typically comes in for you.
Just be careful not to pay lateand incur fees or interest
because that's counterproductivepay on the last day that it's
due, not earlier.
(19:37):
If you need to conserve cash,here's something that I do in my
own business that's workedreally well for both me and my
clients since most of the work Ido is reoccurring monthly.
I've set up automatic payments.
When a client fills in theirpayment form, I let them choose
the day of the month that theywanna be charged.
It gives me predictable income,which is good for cash flow, and
(19:59):
they get to pick the day thatlines up best with their cash
flow.
It's such a win-win, and I getconsistency while they get
flexibility.
Cut unnecessary expenses.
Periodically review yourexpenses and see if there's
anything non-essential that youcan cut even temporarily
subscriptions or services thatyou no longer use, unused office
(20:20):
space trimming some fat can freeup cash.
This doesn't mean that youshould starve your business of
necessary expenses that help yougrow.
It just means eliminate thewaste.
Plan for big expenses.
If you know a significantexpense coming, like an annual
software renewal or an equipmentupgrade, a tax bill plan for it.
(20:41):
Set aside a bit each monthleading up to it.
That way it doesn't clobber yourcash all at once.
This is basically like a sinkingfund.
Not fancy.
It's just smart.
Number five, build a cashcushion or an emergency fund.
Just like personal financeexperts say, have an emergency
fund.
Businesses benefit from a cashreserve too.
(21:03):
The idea is to have a buffer ofa few months worth of operating
expenses in the savings accountor an easily accessible form.
That way if you have a suddencash flow issue, a big client
pays late, an unexpected expensehits, you can dip into the
reserve instead of scrambling orborrowing.
Start small.
Even one month of expenses savedis a great start over time, you
(21:25):
might build this up to three,four, or six months of runway.
It sounds like a lot, but chipaway at it in good months, put a
little extra aside.
This cushion gives you peace ofmind and options.
It turns potential disastersinto mere inconveniences.
Remember that stat, 86% ofbusinesses would struggle with a
(21:46):
two month loss of income.
By building a cushion, you putyourself in the resilient 14%.
It's a great goal to worktowards.
Number six is use tools and techto your advantage.
Don't try and do it all in yourhead or manually.
There are fantastic tools, manyaffordable or even free that can
help you with cashflowmanagement accounting software.
(22:08):
As mentioned before.
To track everything in oneplace.
Cashflow dashboards are appsthat connect you to your
accounting software andvisualize your cashflow in real
time.
Even a simple calendar withreminders for when big bills or
invoices are due can help youstay on top of timing.
If numbers aren't your thing,consider bringing in a
bookkeeping professional orusing a part-time CFO Service to
(22:30):
help you set up reports andexplain them to you.
It can take a huge weight offyour shoulders.
Number seven, price andinventory strategies.
If you sell products, a lot ofcash can get tied up in
inventory.
Be mindful not to overstock oninventory that sits for too
long.
That's cash sitting on a shelf.
Sometimes it's better to orderless, more frequently.
(22:53):
Also, make sure your pricing iscontributing to positive cash
flow.
If your margins are razor thin,even a little hiccup can cause a
cash flow crunch.
Occasionally review prices andcosts to ensure that you're not
inadvertently sabotaging yourcash situation.
Example, a product that you sellat$5 that costs you$4 and 90
(23:15):
cents in variable costs.
Might be profitable in volume,but one slow month and you're in
big trouble.
Maybe it should be priced at$6or something like that.
All right.
That was a lot of tips to avoidoverwhelm.
Let's think of these as a menuof actions.
You don't have to do everysingle thing all at once.
(23:36):
Even implementing a couple ofthese can start improving your
cash flow, for example.
Maybe you commit to updatingyour books every Friday and
sending out invoices immediatelyupon project completion.
That alone might cut yourpayment wait times and give you
clear insights.
Then you might say, okay, I'llset up a simple cash flow
forecast for the next eightweeks.
(23:57):
Do that, and suddenly you feeleven more on top of things.
Progress step by step.
The most important thing is tobe proactive.
The days of shoving receipts ina drawer and praying there's
enough in the account at the endof the month, they need to be
behind you.
Instead, you'll be driving thecash flow bus now, not just
riding it, and trust me, whenyou get in the habit of managing
(24:18):
cash flow, it starts to feelreally empowering.
You see the impact of yourdecisions more clearly.
Cashflow goes from being a scaryunknown monster to a familiar
aspect of your business.
It becomes manageable.
Now, you might be wondering,this is great, but it also
sounds like a lot of work Whichbrings us to an important point.
(24:40):
The role you play versus therole of a bookkeeper or a
financial helper can play inmanaging cash flow.
Let's break that down becauseunderstanding who does what can
make your life much easier.
As a business owner, you'relikely juggling a million
things, whether you're handlingsales, marketing, or customer
service.
Managing cash flow is a part ofyour job too, but you don't have
(25:01):
to do it alone.
Think of it like a team effort.
You lead the strategy and yourbookkeeper handles the daily
details.
So what is your role as thebusiness owner?
You are the cashflow captain.
That means understanding the bigpicture, how money is coming in,
what's going out and what'sleft.
You set the prices, decide onpayment terms, and make the big
decisions like when to cut costsor invest in something new.
(25:24):
If you're not crunching everynumber yourself, it's your job
to regularly check in and usethose numbers to guide your
choices.
Your bookkeeper's role is yourbehind the scenes partner.
They track and record everytransaction, reconcile your bank
accounts, send invoices, followup on payments, and keep your
books clean.
They also generate reports thathelp you spot trends and make
(25:47):
informed decisions.
Basically, they give you thedata and clarity that you need
to steer the ship confidently.
When both of you are doing yourpart strategy on your end and
precision on theirs, cashflowmanagement becomes so much
smoother.
You'll avoid surprises,shortages, stay on track with
your goals and feel way more incontrol of your business
(26:08):
Finances.
So let's take a moment to recapthe key takeaways, so this all
sinks in nicely, and then I'llsend you off with a bit of
encouragement and a fun littleinvitation at the end.
If you're ready for extrasupport, here are the essential
points from the episode.
Think of this as your cheatsheet moving forward.
Cashflow equals money in andmoney out.
(26:28):
This is the movement of cashthroughout your business.
Positive cash flow means more inthan out, and it's what you're
aiming for most of the time.
Negative cash flow, more moneyout than money in can happen,
but you need a plan for thoseperiods.
Remember, a business can beprofitable and still run out of
cash, so tracking when moneymoves is critical.
(26:51):
Common cash flow.
Challenges are manageable,inconsistent income, surprise
expenses, and slow payingclients are the big culprits
that cause cash flow stress.
You're not alone if these impactyou.
Most businesses face them, butthe key is anticipating and
mitigating their impact.
A slow season or a late invoicedoesn't have to spell disaster.
(27:11):
If you see it coming and youprepare why it matters.
Cash flow is the lifeblood ofyour business.
Poor cash flow is a leadingcause of business failure.
It can force you into bad debt,strain your personal wellbeing,
and make you miss growthopportunities.
On the flip side, mastering cashflow sets you up for stability
and success.
(27:31):
Businesses that keep a close eyeon cash cashflow have a much
higher survival rate.
Knowledge is truly power.
Here we've also covered a wholetoolkit of strategies that you
can start using right now totake action and make real
improvements in your cash flow.
Keep your financial recordsupdated and accurate, either DIY
or with a bookkeeper's.
Help know your numbersregularly, review and even
(27:55):
forecast your cash flow so thatyou can anticipate these issues.
Speed up cash coming in.
Invoice fast.
Enforce terms, incentivize earlypay, diversify your payment
options, control cash going out,negotiate terms, cut unnecessary
costs, and time your paymentswisely.
(28:15):
Build a cash reserve whenpossible to cushion against
surprises.
Use tools and get help.
You don't have to do it manuallyor alone.
There's softwares andprofessionals like bookkeepers
that are always ready to help.
Each small improvement in theseareas can relieve pressure and
strengthen your cash position.
As for roles, you are thecaptain.
(28:36):
Bookkeeping is the co-pilot.
As the business owner, you steerthe strategy for cashflow making
decisions, planning and ensuringit's a priority.
A bookkeeper may handle theday-to-day details, keeping the
books, managing invoices andbills, and providing you the
data that you need, you worktogether to keep the cash flow
ship sailing smoothly.
(28:57):
If you don't have a bookkeeperyet, consider when might be the
right time to get one.
It can free you up and bringexpertise to your business if
you do have one.
Make sure you're trulyleveraging their skills and
insights.
Most importantly, remember thatmastering cashflow is a journey.
It's not a one-time task.
You don't have to be perfect.
Things will still pop up anunexpected expense.
(29:19):
A client who pays late, that'slife.
By implementing what you'velearned today, though, you'll be
so much better equipped tohandle those challenges.
Instead of reacting with panic,you'll respond with a plan, and
that is a huge confidencebooster as an entrepreneur.
Imagine if you no longer feltthat pit in your stomach every
time a bill arrives.
Imagine looking at your bankaccount and knowing that you've
(29:41):
got the next few months covered,plus a plan for the next several
after that.
Imagine being able to say yes toa great business opportunity
without worrying if you'll havethe cash to make it happen.
That's what solid cashflowmanagement can do for you.
It gives you freedom, options,and peace of mind.
You've got this.
It might take a little bit ofhabit building, but every step
(30:02):
you take to master your cashflow is a step towards stronger,
more resilient business, and youdon't have to do it alone.
If you're feeling a bitoverwhelmed or you're excited to
get control of your cash flow,but not really sure where to
start, we can take thisconversation a little bit
further.
I would love to invite you tobook a free consultation with
Starlight Bookkeeping.
This is a no pressure chat wherewe can talk specifically about
(30:25):
your business's cash cashflowsituation.
Whether you need help settingup.
Good bookkeeping systems,creating a cash flow forecast,
or just someone to brainstormideas with, we are here for you.
Sometimes a fresh set of eyesand a little guidance is all it
takes to turn things around andit's free, so why not?
You can find the link to book acall in the show notes, or you
(30:47):
can visit our websitewww.starlightbookkeeping.com.
Let's work together to make surethat your business' finances
shine as brightly as the passionyou have for your work.
Thank you so much for hangingout with me today and investing
this time in your business'sfinancial health.
Mastering cashflow is one of thebest gifts you can give to your
business and yourself.
(31:08):
I hope you're walking awayfeeling more empowered and
informed.
Keep that momentum going.
Take one of the tips from todayand put it into action this
week.
You'll be so glad you did.
Until next time, stay proactive,keep that cash flowing, and as
always, happy business growing.
Here's to your success and peaceof mind.
Catch you in the next episode.
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