Some people are just better at saving money than others as we sometimes see in married couples where one spouse is a spendthrift and the other a miser. As a household, we can often trim expenses by cutting out small expenditures, skipping the daily trip to the coffee shop and opting for home brew instead. As a business, managing cash flow can be very challenging especially given todayâ€™s tough economy. But we can learn from the masters and use these four, daily habits to successfully stay on top of our important money matters.
#1 – DAILY CASH FLOW BASICS:
Lawyer and venture capitalist Fred Adler simply states, â€śHappiness is a positive cash flow.â€ť
Not to insult your intelligence, but also simply put, positive cash flow means that the amount of money coming into your business is greater than what is leaving your firm and negative cash flow is the exact opposite.Â It is recommended that you keep a daily grasp on your money management. Some are referring to this as â€ścash flow with your coffee.â€ť You need to play the numbers game each and every day by taking a hard look at these figures on a circadian level.
#2 – PROFIT AND LOSS:
Musician Johnny Cash once said, â€śI am two people, Johnny is the nice one and Cash causes all the trouble — they fight.â€ť
Here the argument is between profit and loss. If you already have an accountant, they should be giving you this P&L information regularly. If you are on your own with bookkeeping, then you need to be using Excel, Google Docs or some form of organisational tool to look at your profits and losses. You should be examining these figures with a fine tooth comb. See exactly where you are spending, where you could be saving and what you might be able to negotiate.
If you are seeing more red than black, then you need to take a harsh look at what is a necessity and what is a luxury. Even if your P&L has an attractive bottom line, that doesnâ€™t mean that you canâ€™t trim out some of the unnecessary fluff.
#3 –Â CREATE A PLAN:
Warren Buffett needs no introduction and he offers this advice, â€śToday, people who hold cash equivalents feel comfortable. They shouldnâ€™t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value.â€ť
When dealing with cash, it is safe to take advice from someone who has plenty. We need a plan to keep our cash flow safe and sound. By analysing figures from the past, create a budget and stick to it, hold fast to it on a daily level. Using projected profit numbers, you can decide whether it is time to buy new equipment or cut back on unnecessary supplies.
#4 – IMPLEMENT SYSTEMS:
Championship NFL american football coach Hank Stram once stated, â€śYesterday is a cancelled check, today is cash on the line and tomorrow is a promissory note.â€ť
After looking closely into the past, operating more efficiently on a day-to-day basis, we now need to implement systems that will keep us on track for the future. We need to decide what is to be done weekly, bi-weekly and monthly. Some of these tasks are obvious, paying the bills on the first and fifteenth of the month or giving out weekly paychecks. But others need be considered from a cash flow management perspective. On a certain day, examine weekly reports that show payroll expenses and other payables in comparison to cash on hand. Look at your month-end figures and check for things that may have gone over budget.
Dave Landry Jr. is an online business writer and guest author with a passion for business and technology. His writing has been featured across the web and covers business communications, customer service, media marketing and virtual technology. Follow him on Twitter via @davelandryjrÂ