One Way Consultants Can Effectively Manage Cash Flow

Octavia Conner

By Octavia Conner

Tags: All, Virtual CFO, Cash Flow, Maximize Profits, Strategy

Friday is the day that you should spend at least 30 minutes reviewing YOUR money.

 

In today's LIVE video, I discuss a few strategies you should consider for your consulting firm's cash flow management.

 

You want to review your weekly Cash In & Cash Out.

    1. What was expected and what happened?
    2. Why did it happen, and how can you improve going forward?

 

Revenue and Cash In are two different numbers.
  1. Cash In – is all of the money that has entered your company in any form. (revenue earned falls under cash in)
    • Revenue is what you earned from providing your services and products.
    • Cash In - could be the result of receiving loans, grants, and owner's contributions.

During Financial Friday, you want to review how much revenue you have earned thus far. You want to compare what you have earned against what you should have made.

 

Let's take a look closer:

        1. If your monthly revenue goal is $10,000. (Each week, you should strive to earn $2,500 (10K divided by 4)
        2. Let's say we are ending week 2 of August, which means you should have earned at least $5,000.
        3. If you haven't, you need to determine why and what you can do to earn the remaining amount in the following week.
        4. Also, during the following week, you must figure out what action steps will lead to hitting that week's revenue goal plus earning the remaining amount from last week.
Cash Out – is all of the money that has exited your firm. Cash Out monies includes expenses paid, owner's draw, loans, and credit card payments, to name a few.
  • For expenses, you want to determine that returned on the investment or what it will be in the future.
  • You also need to identify how much money is expected to leave your business next week and the impact it will have on your cash balance and profit.
    • NOTE - Maintaining clarity on your cash balance and profit at all times is essential to growing your consulting firm.
  • You also need to determine how to decrease your costs while operating effectively and efficiently.

 

CEO Next Best Steps: 
Four things to remember when conducting Financial Friday cash flow management for your consulting firm:

      1. You always want more money entering than exiting your business.
      2. You need to measure how close or how far you are from achieving your business's goals.
      3. Proactively plan for the following 13-weeks
      4. Four Numbers You Should ALWAYS Remember
        • Your Monthly Revenue Goal
        • Your Monthly Expenses Cap
        • Your Monthly Break-even Number
        • Your Cash Balance

As a virtual CFO for consultants, our main focus is to help you maintain a positive cash flow at all times. Our services include training you on how to implement a simple but effective Financial Friday system for your business. If you are a 6-figure consultant who desires to cross the million-dollar mark then working with a virtual CFO is a must. Click below to chat with us today so that next Friday you're able to log into your bank account and smile.

Apply For A Discovery Session Today!

 

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