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Everyone should have a budget!  Even if it’s just a general idea in your head.  You should know how much it costs to run your business for a month and a year, and how much income you can produce for different levels of expenditure.  It will all be a guess when you are starting out, but make that guess!  By going through the process of making predictions you learn to think critically about your business. When you have some months of data, go back and review your assumptions and figure out what you need to change.

I can help you approach this from several different directions depending on your needs.  After we have several months of data in QuickBooks we can look at monthly averages, timing differences, seasonality, and trends.  We can walk through your income cycle with a hypothetical customer and see how your understanding compares with your actual experience.  We can discuss future changes and their likely effect on profits.  From there we can make a budget to hold yourself to, or a forecast to help you plan.  A year later we can compare the budget/forecast to the actual results and improve your business.

Cash Management: 

Many of you ask me about cash management.  Daily cash management takes daily closing, which is difficult for small companies.  Big companies have full time accountants to reconcile daily.  They have accounts payable and accounts receivable clerks to estimate future inflows and outflows.  You can do some of this yourself if you take a few minutes every day to login and record the latest transactions.  But, as a small business you probably have significant uncertainties about when your customers will pay you and what your actual expenses will be.  The answer is to keep a cash buffer in your account so you can relax about daily balances.

QuickBooks won’t predict future cash needs.  There are apps that can pick up payables and receivables due dates and put them on a calendar.  Truebill can pick up recurring patterns in your accounting data and notify you of upcoming auto-payments.  But because of price changes, unexpected expenses, and customers that don’t pay you on time, all this may not keep you from bouncing checks.   

Keep a cash buffer in your checking account!  I recommend at least enough for one month’s expenses. The cash buffer will be your best investment ever both in saved overdraft fees and peace of mind. 

If you are always short of cash you may have a bigger problem.  Is your business profitable?  Do you need a loan to get to the next level?  Let’s look at the numbers and see what we can do to lower your stress.

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