MONEY Managing your cash flow

Get a grip on  your cash flow


With the recession roaring and the budget biting, it’s easy for a small business to panic. However, knowedge is power, and knowing exactly where you stand financially will help.

Money Matters
Brid Conroy

It’s the third of January and I’m thankful for the touch of spring in the air as I walk my dogs along the coast on the road to Roonagh. The subject matter of my next article is on my mind: How to manage one’s cash flow when the cupboard seems just a little bit too bare.
However, it occurred to me that there really is, no better time to have a good route around inside that cupboard and clear a space ready for the year ahead. So here’s what you can do.

Snapshot
Firstly you must take a snapshot of your cash situation right now. It is so easy to ignore. I’ve had bouts of not keeping a proper check on the bank balance and without fail, my cash runs away with itself. This exercise is most suited to those of us in self-employment but it could be useful for anyone to do. So start by listing horizontally on a page, all bank account balances as they stand today, any relevant cash balances, even coins in jars, deposit accounts and savings plans. Include everything.
Next list all monies owed to you. Again, leave no stone unturned and include everyone who owes you for any work done. As well as looking for new work, it is important to get paid for work already done. Then add this amount to your bank balances and you now have a total of all your cash assets.
Underneath, you are now going to list your debts, again horizontally, with headings like overdraft, credit card, vat, annual subscriptions, other bills not paid, car lease (exclude your mortgage for now). For each debt, include the amount you owe now and the amount of the total debt as per the example attached. Then compare your total debts to your total assets and you will see that it is not near as bad as you thought. In most cases you’ll be owed and own more than you think. We tend to focus mistakenly just on the bills to be paid.

Four-week cashflow
Now prepare a list of your cash in and cash out for the next four weeks. Start by filling in the cash balances you have available to you in the next week. Then focus on the cash owed to you. Who is likely to pay you next week? When will the rest pay you? The most valuable thing you can do is phone everyone who owes you money and ask ‘when do you expect to pay me?’.
Next, think about new jobs/earnings in the next four weeks and when they might pay. Then include what you have to pay in the next four weeks from the list of debts already prepared and of course your normal day to day living. Doing this will help you prioritise what can be paid when and focus you on what cash needs to be collected to keep on track. On top of this you may think about challenging yourself to pay a little bit extra off one of those debts. You’ll be amazed how this changes your attitude to debt.

Keep ahead
Finally, I recommend spending half an hour every week revisiting your list, moving everything forward a week. None of this has to be an exact science, the object of this exercise is to get that money moving and flowing. A small bit of discipline in this area will pay off enormously in the long run.
Those with serious debt issues must always seek help. The Money Advice and Budgeting Service (MABS) is a free service and a good place to start. It can be reached on on 094 9028888. If this still feels uncomfortable, ask a friend or family member to help.

While every effort is made to ensure that the information given is accurate, it is not a legal document. Responsibility cannot be accepted for any liability incurred or loss suffered as a consequence of relying on any matter published herein.

Brid Conroy FCCA is a Chartered Certified Accountant with a practice in Louisburgh. She works on improving personal finances and the profitability of small and medium-sized businesses. To contact Brid, call 098 66870 or theoldschool@iolfree.ie.