How To Gain Cash Flow Control In Business

By Octavia Conner

Do you feel as if you're working hard to grow your business, however, you can't tell when you log into your bank account?

Basically, your bank balance doesn't match your work ethic no matter how hard you work)

That is because you have little to no control over your cash flow. And, the truth is, you must STOP working hard for the next dollar and MAKE YOUR MONEY WORK FOR YOU!!

In this article, I am going to show you how by providing four proven strategies to help you gain cash flow control immediately.

Before we jump into the four strategies, you must first under that Cash Is Your Business's Superpower.

To operate efficiently and effectively while accelerating business growth, you MUST maintain positive cash flow at all times.

You must also understand that cash flow control is not about earning more revenue. While this is important, it is also equally important that you control the revenue you are currently earning. If you are unable to control the amount you are now receiving, how do you expect to control a more significant amount? 

Think about that as we deep dive into the four strategies: 

Get crystal clear on how much money is exiting your business. 

You need to know that when, why, and how of your cash flow. You also need to determine the ROI and actual value of any money that is leaving your business before it goes out of your company's bank account. 

Operate on 80% or less of your total predicted earnings.

I will use an example to help you understand this strategy. 

Let's say that company is earning $30,000 per month. To operate on 80% or less of your total earnings means that the company's total expenses can not exceed $24,000.  Now, identify your company's total monthly earnings then determine the 80% amount your company will use to operate each month. The key to making this strategy work is that you must reduce or eliminate all of the cash outflows that are not needed to operate the business.

I also recommend you break your total amount down into weekly spending caps. For example, $24,000 monthly equals $6,000 weekly. Each week you can not exceed your weekly spending cap. Last, you will allocate the remaining 20% into an interest-bearing savings account. I like to call this account – the Financial Peace account.

Set spending caps for each outflow categories 

I want you to identify the many ways you are spending money. Next, allocate an amount of money that you will spend in each category based on a percentage.  For example, let's say your categories are: Operating Cost, Software Cost, Marketing, and Misc. You could divide them up as follows:

Operating Cost (includes rent, phone, utilities, insurance, etc.) – 30%

Software – 10%

Marketing – 30%

Misc. – 10%

Once you identify the amount you will spend in each category, each week or each month, you can not exceed that amount.

Hire a financial manager, accountant or CFO

A financial manager, accountant, or virtual CFO will oversee your financial management needs. This person will hold you financially accountable for achieving your money goals. They will provide insight and oversight of your finances. Due to their expertise, they can see things you are not able to see. 

This person will also maintain your accounting records, allowing you as the CEO to spend your time on revenue-generating activities. Last, this person will strategically identify ways to increase revenue, cash flow, and profits while reducing tax liabilities.

To recap, in order to gain cash flow control you must,

  1. Get crystal clear on how much money is exiting your business
  2. Operate on 80% or less of your predicted money revenue
  3. Set spending caps for each cash outflow category
  4. Hire an accountant, financial manager or CFO

The truth is - once you gain cash flow control, your bank balance will gradually increase.

How? Well, I am glad you asked. You will begin to reduce how money is leaving your business as well as operate below your revenue means. As a result your cash flow will continue to increase. Also, because you will become familiar with operating below your means, each additional dollar you earn should directly flow to your bottom line.

Now it's time to check yourself.

What are the top two expenses or cash outflows that you know you need to cut without a doubt?

Join me over in the Say Yes To Profits group and let me know your answer. For additional cash flow control strategies, click the free Cash Flow Acceleration checklist in the description. 

Last, if you would like a trusted accountant to help you implement cash flow control strategies, let's chat. Schedule a complimentary discovery session today.

About Octavia Conner

Octavia Conner is the CEO of Say Yes To Profits, a full-service virtual accounting firm. As a Virtual CFO, she helps consultants build million-dollar firms sooner than they think.

As an award-winning financial strategist and published author, she was selected as one of the Top 50 Cloud Accountants in North America. Octavia strategically combines over 13 years of accounting, business, and finance experience that has enabled her clients to grow between 30% and 350% within 12 months and save over 60% in taxes.

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