Hi, I’m Siu Ling Hui with a video about how
to manage your business cash flow effectively and efficiently for business success. Cash flow has to be managed at 2 levels. The
Operational Level which is the Working IN the business level. And at the Strategic Level
which is the Working ON the Business level. You need to do both. Each provides different
insights into your business health. Both are needed to help you plan your business’ financing
needs. As I explained in the video titled What Is
Cash Flow, managing cash flow at its core is simply about juggling your In Tins and
the Out Tins. With Operational Cash Flow Management, you are essentially mapping out your WEEKLY
In Tins and Out Tins for out to 8 to 12 weeks. Strategic Cash Flow Management is about the
bigger picture. You are looking at monthly cash flows for the coming 12 to 18 months. Operational Cash Flow Management is about
knowing what’s happening with your cash flow on week by week basis. It’s done with the
Rolling Weekly Cash Flow Forecast. That’s just a fancy name for what is literally a
weekly count of In Tins and Out Tins. It’s as simple and basic as that. But it’s extremely
effective in helping you identify any blips in your cash flow within a month.
You should forecast out 8 weeks at a minimum. But it’s better to do it for 12 weeks. It’s called a rolling forecast because you
roll it forward by adding a week to the forecast every week. Your previous week 2 comes your
new week 1. The aim is to ensure that you are always looking forward 8 to 12 weeks.
Once you’ve set it up, it should only take an hour or so, maybe even less, to update
it each week. Now let’s take a look at Strategic Cash Flow
Management. This is where you are Working ON the business. It’s about understanding
the cash flow implications of your business strategies. It’s done with the Cash Flow Statement.
This Statement is the Show Me The Money part of your accounts. How much cash will your
new growth strategies generate? How much money will you need to fund the activities required
to achieve your business growth objectives? In your historical accounts, this Statement
is how you find out where your money came in from and what it went out on. The Cash Flow Statement is a CRUCIAL link
between your Profit & Loss and Balance Sheet. The only way you get a full picture of your
business is by looking at what is termed 3-way accounts: that means a Profit & Loss, a Balance
Sheet and a Cash Flow Statement all of which that tie in with each other.
In my experience, I have found that the Cash Flow Statement is usually missing in action.
And this really stumps me because it is the part of your accounts that tells you about
the lifeblood of your business. Is there a healthy flow of cash pumping through your
business or are you in danger of bleeding to death? And that’s not all it does. It can
also alert you to potentially serious errors in your accounts. Make sure you ask your book keeper or accountant
to provide you with the Cash Flow Statement as part your monthly accounts. Master Your Cash Flow. Know your Finances
so you can Drive strong sustainable growth and Thrive. Thank you for watching. If this
has been useful, please Like and Subscribe to my channel.