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Cash Flow Management : A Critical Financial Aspect When Running a Business

Cash flow management is critical to all types of businesses. Large or small, entities with cash flow issues often struggle when meeting monthly financial obligations. Aside from payment of day-to-day overhead costs including payroll, businesses might need additional cash to settle payments to suppliers, pay loan amortizations and in some cases, to invest in new equipment or technology, as well as make plans for expansion.

That is why cash flow is regarded by many as the primary indicator of the health of their business enterprise. A positive cash flow means money projected to flow in as results of business operation exceeds the funds needed to meet financial obligations as they fall due.

Conversely, a negative cash flow denotes that the business does not generate the expected income or has trouble in collecting and managing their receivables,converting their inventories, paying their expenses and liabilities.

Organizing the Basic Elements of the Cash Flow Concept

Based on what has been described above, there are three activities driving the cash flow of a business: business operation, financing and investing. A good business practice is to organize the financial information of the three activities by way of a Cash Flow Statement. That way, they can determine the actual financial conditions of a business.

An even better practice is to use those financial data in making monthly Cash Flow Projections. The projections will then serve as income benchmark and investment and financing parameters to follow when making financial decisions.

Cash Flow from Business Operations include cash received from customers during the month, whether as C.O.D. or as collection of receivables due within the month. This will be reduced by cash paid to meet ordinary operating expenses and payment to suppliers in the same month.

Cash Flow from Investing Activities Cash disbursed to purchase additional equipment, software or other forms of capital expenditure.

Cash Flow from Financing Activities – Money coming from this particular activities include the business owner’s investments, and funds derived from bank loans or lending institutions. Reductions of cash flowing from these activities will be by way of payments to periodically settle related loan/s and partial withdrawals made by the business owner.

Businesses structured as C corporations present different kinds of investment activities as they deal with issuing shares of stock for subscriptions as well as pay dividends to stockholders.

Rental Businesses Not Exempt from Cash Flow Issues

Although rental businesses may seem less complicated that those engaged in manufacturing, trading and service-providing businesses, landlords are likewise susceptible to cash flow issues. Problems usually arise when a great number of tenants do not pay on time or eventually fail to settle the defaulted payments.

Landlords with multiple properties and firms invested in property rentals, usually hire project management professionals to avoid cash flow struggles. Many have come to realize that the root cause of rental defaults are results of inadequate tenant screening or insufficient background checking.

U.S. states have sifferent laws that limit the reasons by which applicants can be rejected as tenants. Still legal reasons for rejections are usually supported by documents or recommendations gathered by way of background checking.

In Georgia, Atlanta, property management stockbridge companies offer conventional services that come with guaranteed results. These may include assurances for tenant replacement, pet damage protection, best price for property repair and similar other promises, all serving as proof that their property management services can bring positive cash flow results.

Financing the Cannabis Business: How to Manage It Properly?

Basically, the issue regarding the proper funding of the cannabis business is the complexity of its legalization. Based on the federal level, marijuana is actually not legal. However, when it comes to its utilization for recreational purpose, it is approved legally within nine states and in Washington DC. At the same time, it is also decriminalized broadly in many states.

Because of this decriminalization, the market is generally the main focus for those wanting to put up a cannabis business.

Bank Financing for Cannabis Industry

Since challenges for the marijuana industry still do arise because a go signal was not yet totally provided by the federal government. Having this scenario, almost all banks are under the governance of the federal government. However, the federal government categorized cannabis-related transactions as a criminal act, banks covered under the federal government cannot handle any cannabis money for Stocktrades.ca.

This is applicable even if the reasons for needing the money is for personal use won’t be a cause for approval. The main reason is that the bank is covered by the laws on money laundering. Once the bank is caught doing a money laundering act, heavy penalties should be imposed.

Alternative Financing Options for Cannabis Business

Since bank financing for marijuana business is not feasible, good thing, there are other financing options available. However, these alternatives are not the ideal ones, they are less stable compared to banks. Luckily, since they are not regulated under the FDIC, they are not obliged to comply on the same financial laws. And, another thing is that cannabis business startups with limited funding can now be possible.

Equity fund

Actually, there are three primary ways in order to get funding through equity. These are crowdfunding, angel investors, and venture capital firms.

Crowdfunding – this funding is very common for business start-ups.
Angel investors – this funding has an AngelList which contains section intended for assisting those who are in need of investing in cannabis.
Venture capital – this option is good for those who are planting funds for start-ups.

Debt fund

This financial options can be feasible through getting of loans via business credit cards. However, this seems to be a little bit trickier compared to the first one.

Online lenders – they offer short-term funding for marijuana business. But, they don’t give credit cards.
Debit system – the use of credit cards are permitted but a special debit system can be used.
POS systems – this funding system can allow to handle starting from the very beginning of the process up to the end point of sale.

Tips For Better Budgeting For The Year Ahead

The annual budgeting process is often inefficient, time-intensive and provides little value. The practice of budgeting shows that successful companies look beyond the financial content and also focus on ‘soft’ aspects such as culture and behavior. It is precisely this combination that enables companies to improve their results and strengthen their competitive position. After the summer, many companies restart their budgeting process to prepare the budget for next year.

The Importance and Use of Budgets Within an Organization

As an alternative, there has been a talk of ‘beyond budgeting’ for years, whereby the budget cycle is completely discarded. There are indeed companies that no longer have an annual budget round but work with ‘rolling forecasting’. However, this is a bridge too far for most companies. They do not want to abolish the budget but strive for a more efficient and effective process. But this should not be the case. Budgeting allows companies to look at current financial data whether the company has sufficient funds for future projects or whether the company needs to take out a loan, no guarantor needed. These are just a few scenarios where budgeting can help.

What does the budget process look like?

The process starts with the objectives and strategy an operating budget a liquidity budget an investment budget a balance sheet forecast. Project organizations – such as construction companies, machine manufacturers or business service providers – must also prepare a project budget as a fifth component.

How can the process and quality of the output be improved?

The budget cycle does not seem like ‘rocket science’ but is a difficult process in practice. It is not uncommon for companies to spend months discussing and adjusting the figures.

Ensure clear roles and responsibilities

The budgeting process is not a financial party for the CFO and controllers, but a company-wide process in the context of the strategy. The process is coordinated by ‘finance’ but the input must come from ‘the business’. After all, business managers can better assess what needs to be done and what is required for that. The business is the budget holder and owner of the figures, finance is responsible for the process and must make it into a coherent whole.

Don’t start too early and make a schedule

A budget is the result of the business plans. The condition is that the budget cycle has a short lead time and that there is a clear schedule stating who, what and when should be done.

Start with the sales, end with the cash

The budget process starts with the preparation of the operating budget. Finally, the liquidity budget can be made with cash flows from operational, investment and financing activities. If the company is ‘short of money’ then additional financing must be looked into in a timely manner.

Work with current data

Build the budget ‘bottom-up’ with volumes and rates or cost prices. Controllers need these input variables in their financial models to arrive at euro amounts. In addition, this allows the differences between the budget and the realization to be analyzed better later.

Manage the data

Special budgeting software can then offer a solution. There are also ERP systems in which the budget is made so that the realization can easily be compared with the budget later.

Work with scenarios

Scenarios are not predictions, but descriptions of a possible future. They provide insight into the consequences of potential events and help companies prepare for this. The development of scenarios is a learning process in which consideration is given to what the company can do if a certain event or situation occurs. By changing the input variables in the budget, what / if analyzes can be performed.

If the budget model is set up properly, then the scenarios not only pass on to the result but also to the balance sheet and cash flows. This allows companies to anticipate potential liquidity shortages and additional capital needs in a timely manner.

Budgeting is a useful activity if it is not seen as a financial exercise.

Business Startups with Limited Funding? Now it’s Possible!

Seeking channels to fund your marketing campaign particularly if you are a step off and want to launch your business off of ground can be quite difficult and tricky. It could take time before your company starts to rake profits and whether you like it or not, marketing is just behind operational and technical needs.

In an effort to make profits, it is imperative to spread your message regarding the service and/or product you offer. The question is left is, where you could get money to come up with effective and clever marketing campaigns? Well, one of the methods is by taking lawsuit settlement loans but if you really have tight funds, don’t fret. There are other alternatives you could try.

Start Saving

While it sounds impossible to set aside money when you are thinking of how to cope up with day-to-day expenses, saving money for yourself is actually a good option. Basically, saving even just a little per month for your marketing budget would make a huge difference as time passes by. The best part, you do not have to pay any interests or give shares away, like with other funding options.

Crowdfunding

These days, majority of the start-up businesses are utilizing this option.

It’s carried out by pitching your marketing idea or your business to willing and interested investors from different parts of the world. If they sense that your idea or business is something that they liked and has high probability to succeed, then you may be able to convince them to invest. Of course, this investment is in exchange of a certain percentage of your business.

Think of Shark Tank. Well, it is basically how it goes, minus the reality and drama of seeing your potential investors face-to-face.

Apply to the Bank

With any sterling business plans and bank, it’s feasible to be granted with business loan. Such loan can be extremely useful in fueling your marketing campaigns. However, you must be mindful of the fact that these loans come with certain interests and with that, it should be factored in when making payments on top of your cash flow. But if everything has fallen into place, this is a straightforward way of securing buffer fund for your business.

Seek Out a Grant

Well depending on the area of your business, it might be charitable or government grants that’s available for your venture. Check out the web to learn which funds are being handed to small businesses similar to yours and prepare an application to justify why you need to be granted with one.

Marketing Wonder of Steve Jobs


It was after the era of Nokia, Sony-Ericsson and few other phone companies that this one big giant swallowed everyone in the competition. It is very noticeable that almost 2 out of 5 people are using iPhone and these people don’t just buy this phone to use, it is also for showcasing one’s status. What is the marketing mind of Steve Jobs?

Basic Marketing Principles to Keep


“Lucky? No. Only good marketing.” This was said on a TED Talk about business. And that is right. Business runs because somebody needs something and you are doing the job of providing what they need in exchange for a certain amount. Knowing WHO needs WHATi is a very important element in making a business plan.

Calculating Your Market Share


According to a business insider, “Population does not mean Market.” This is true once we start to consider the preferences, decision-making process, competition, purchasing power, and such factors when we talk about the market. It is also important to note that a business model will only be feasibly firm when it has a certainty about the target market since it is the market that fuels the business. Here is a quick run-through on how to calculate your market share.