never run out of cash
TRANSCRIPT
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Never run out of cash6 lessons from 6 years of entrepreneurship
in the web outsourcing industry
Roxana Olaru, Bucharest, July 2015
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Cash Flow is the blood of a business
P 2
Timing
Movement
In-Out
Roxana Olaruwww.creadiv.ro, web development - web design – online promotions
The most expensive money is your ownTo use other people’s money efficientlyyou need to have good cash flow management
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CASH FLOW is more important than your mother
P 3Roxana Olaruwww.creadiv.ro, web development - web design – online promotions
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1) Reality is different than accounting
P 4
Without cash, profits are meaningless!
“Knowing whether you earned a profit (or created a loss) is not the same as knowing what happened to your cash," Phillip Campbell
Roxana Olaruwww.creadiv.ro, web development - web design – online promotions
Poor Cash-Flow Management
Business Failure
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2) Plan your cash
P 5
Set cashflow targets
Create a Cash Flow Statement
Have financial discipline
Roxana Olaruwww.creadiv.ro, web development - web design – online promotions
Agnes Cserhati (AC Powercoaching): “90% of the SMEs I work with do not have a cashflow plan from day one, despite having forecasts of profit margins for years ahead!”
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2) Plan your cash
P 6Roxana Olaruwww.creadiv.ro, web development - web design – online promotions
Always know your Cash Balancenow and 6 months from now!
Plan for future cash shortfalls!
Expenses growth rate
Earning growth rate
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2) Plan your cash
P 7
Divide revenues by category
Prioritize payments
Roxana Olaruwww.creadiv.ro, web development - web design – online promotions
Recurring payments
Non recurring payments
24% VAT
60% HR spendings + taxes20% suppliers10% investments10% savings
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3) Cash coming in – cash going out
P 8
Cash in from clients quickly and pay suppliers late
Agree upon clear payment terms
Roxana Olaruwww.creadiv.ro, web development - web design – online promotions
• Invoice clients 1-10• Receive invoices
from suppliers 20-31
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4) Get paid as soon as possible
P 9
Work with advance payments
Issue invoices promptly
Have and automated follow-up system
Make the payment process as easy as possible
Don’t deliver before payment
Rate clients
Sell more to existing “good clients”
Give discounts for rapid or advance payments
Avoid feelings when you “money talk”
Roxana Olaruwww.creadiv.ro, web development - web design – online promotions
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5) Pay as late as possible
P 10
Suppliers are great creditors!
Pay on time, but not too early before the deadline
Group payments and simplify the process
Flexible payment terms might be better than lowest price
Fully understand the implication of earlier payments, even if you get offered discounts
Roxana Olaruwww.creadiv.ro, web development - web design – online promotions
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6) People matter!
P 11
Value and nourish your relationships with clients and suppliers!
Have a good accountant / financial advisor
Roxana Olaruwww.creadiv.ro, web development - web design – online promotions
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ExtraNever depend on only 1 client
Roxana Olaruwww.creadiv.ro, web development - web design – online promotions
P 12
?
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Extra
Do your best!
P 13Roxana Olaruwww.creadiv.ro, web development - web design – online promotions
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Resources
P 14
MS Office Templates
Google Docs Templates
http://www.vertex42.com/ExcelTemplates/cash-flow-statement.html
https://www.score.org/resources/business-planning-financial-statements-template-gallery
Roxana Olaruwww.creadiv.ro, web development - web design – online promotions