Cashflow Blog

A sample cash flow statement will improve your cash flow management skills. A clear and comprehensive sample will allow you to easily create and understand your business’s cash flow statement.

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Jul 23, Sample Cash Flow Statement

By Lara Sawyer

Running a business is not an easy task and the need of financing is a must. However, a business owner wants a cheap source of financing and not rates that eat up all revenue. Unsecured lines of credit are either too expensive or not available for small businesses. Thus, if the business does not have sufficient assets the owner may have to use his own personal assets. Fortunately there is another solution to secure a loan for your business: the use of the business’ income.

Your business may produce money but it probably does not do so at the rate you want and with the exact timing you need. That is why all businesses need some sort of financial source and secured ones provide a cheap source of funds. There are loans and lines of credit provided both by financial institutions and banks that can be secured with the company’s income in different ways and that can provide all the financing your business needs.

Bank Or Financial Institution Line Of Credit

Your current bank or any financial institution can provide you with a line of credit or a loan based on your business’ profits. Of course the loan or line of credit can be either secured or unsecured but secured lines of credit can provide better terms. Therefore, it is a good idea to discuss with your account manager the best options available to you as a business owner to obtain financing through secured loans or lines of credit.

Your bank or financial institution can require assets to guarantee a loan or line of credit. Just like with home loans or home equity loans, if the company or business owns an immovable property, it can be used to secure a loan. However, if your business’ accounts are managed by the bank or financial institution and payments are processed by them too, you can obtain financing securing it with that income.

Credit Card Purchases As Collateral

Some financial institutions that handle credit card payments will offer to provide you with financing securing the loan or line of credit with the revenues generated by your sales. The most common scenario is a line of credit associated with the account where the money from the sales made with credit cards is deposited. Thus, you can withdraw money even when there is not enough cash on your account and when the sales made with credit card are processed the amount owed is deducted from the income as a percentage that has to be agreed beforehand.

This system provides you with all the financing that you need while at the same time it provides security to the lenders who know that as soon as you receive money from your sales, they will be the first ones to collect even before the money is actually deposited into your account. Such low risk implies that the lender can provide very advantageous terms on your line of credit and it is an excellent way to obtain cheap financing for your business.

Lara Sawyer is the author of this article. She works successfully as a financial advisor with years of expertise on [http://www.fastguaranteedloans.com/unsecured-personal-loans-bad-credit-people-welcome.html]Unsecured Personal Loans. Lara publishes informative articles about home loans, credit cards, auto loans, bad credit loans, business loans and others at http://www.fastguaranteedloans.com

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Securing Your Business Loan With Your Business Income

By Mike Selvon

Most small business owners are quite eager to find avenues to help their enterprise grow into a thriving business. One key approach to help propel businesses forward is securing additional working capital, in order to get the business to the next level.

Usually, this means that the entrepreneur needs to go to a lending institution to get a small business loan. When meeting with a loan officer for this purpose, detailed business financial information will be required.

The most pertinent financial information that you will need to collect in preparation for applying for a small business loan are the basic financial reports that virtually all businesses of any size generate on a monthly or quarterly basis. These financial statements provide potential lenders with a profile of the financial situation of the business. They are also invaluable in providing the business owner with the management knowledge they need to strategically improve their ongoing business plan.

The most basic form of business financial information consists of a collection of financial statements and reports, which are prepared according to strict, standardized accounting principles. Since accounting practices and principles have long been standardized and accepted worldwide, virtually anyone with even a basic understanding can quickly understand the financial picture of a company that is painted by these basic reports.

The main reports that are generally part of a company’s financial information are the following: the balance sheet, the cash flows statement, the profit and loss report, and the overall financial statements, which include highlights and summarize each of the other reports. While the financial statement provides a review, the individual reports go into specific detail for the period of time that the report covers. Many times, when monthly reports are generated there are also quarterly and yearly reports generated that help to provide insights into the overall, financial trend of the business.

The purpose of the balance sheet is to provide the details of all of the current assets of the business, all of the liabilities that the business is obligated to pay, and the resulting business equity. In order for this financial information to be most useful, it should separate the current assets and current liabilities from the listing of the long-term assets and the long-term liabilities.

The profit and loss part of financial information is the report that most commonly covers longer periods of time, usually per business quarter or year. These profit and loss statements often include comparison charts for the previous time period going back long enough to help to identify the important trends.

Without this comparison, it might be easy to assume a business is doing well simply because it is profitable, yet overlook the fact that it is less profitable than the previous year. These trends will be very important to the lenders as it gives them insights about the success of working capital management overall.

When preparing a statement of cash flows, it can be compiled by either using the indirect or the direct method. Generally, this kind of business financial information is better with more detail because the fuller the detail, the clearer the view of the business’s financial situation. Most loan officers agree that for the purposes of obtaining financing, the more detailed the information the better because it shows that the business has nothing to hide.

Enrich your knowledge further by reading more great [http://assetmanagement.akainfoportal.info/Business-Financial-Information.php]business financial information articles from Mike Selvon portal. We appreciate your feedback at our [http://www.mynicheportal.com/financial-services/proving-your-business-financial-information]financial planning blog where a free gift awaits you.

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The Business Financial Information You Need For Funding

In all my financial interactions -  be it planning for clients, training, teaching or writing, people have come to me with some problem which they think is unique.

In all the financial problems, I am able to find a pattern. Believe it or not, people more often than not choose the problem by their behavior. It is easy for me to find a pattern and say, “Well you choose your problem, did you not?“

Your financial problems would have been caused by some (or all) of the following financial behavior:

1. Not planning: The single biggest problem for most people is that they just do not plan their finances. Even if they are not happy about the results of what they have done so far, they do not change the way things are done.
2. Overspending: Many people with not very high incomes have very high ambitions. Most of this problem is because the salesmen in most shops do not tell you the price of a product, they only tell you the EMI - so anything from a plasma TV to a luxury home on the outskirts of the city are made to look cheap!
3. Not talking finance at home: Children are kept away from the finance topics at the dining table. Finance is perhaps the second most taboo topic at home! So many children grow up without knowing how much of sacrifice their parents have gone through to educate them.
4. Parents spending on education and marriage: There are just too many kids out there who believe that they need to worry about savings, investment and life insurance only at the age of 32 plus. This means your father, father-in-law or a bank loan has funded your education and marriage. Kids should take on financial responsibility at a much younger age than what is happening currently.
5. Marriage between financially incompatible people: Most marriages under stress are actually under financial stress. Either the husband or the wife is from a rich background and the other partner cannot understand or cope with the spending pattern. It is necessary to match people financially before marriage.
6. Delaying saving for retirement: “I am only 27 years old why should I think of retirement“ seems to be a very valid refrain for many 32-year olds! Every year that you delay in investing the greater the amount that you will have to save later in your life. Till the age of 32 it might be feasible for you to catch up, but after some time the amount that you need to save for retirement just flies away.
7. Very little life insurance: With all the risks of life styles, travel, etc. illness and premature death are common. We all have classmates who had heart attack at the age of 32 but still pretend that we do not need life or medical insurance.
8. Not prepared for medical emergencies: Normally big emergencies - financially speaking - are medical emergencies. Being unprepared for them - by not having an emergency fund is quite common.
9. Falling prey to financial pitches: The quality of pitches has improved! Aggressive young kids are recruited by brokerage houses, banks, mutual funds, life insurance companies, etc. and all these kids are selling mutual funds, life insurance, portfolio management schemes, structured products, et al.
10. Buying financial products from `obligated persons`: This is perhaps one of the worst things you can do in your financial life. A friend, relative, neighbor, colleague who has been doing something else suddenly becomes a financial guru because they have become an agent! You are saddled with a dud product for life!
11. Financial illiteracy: Most people do not wish to know or learn about financial products. They simply ask, Where do I have to sign? So buying a mutual fund is easier than buying life insurance!
12. Ignoring small numbers for too long: What difference will it make if I save $100 a month? Well over a long period it could make you a millionaire! So start early and invest wisely. It will make you rich. That is the power of compounding.
13. Urgent vs important: Most expenses, which look urgent, are perhaps not so important - the shirt or shoe at a sale. That luxury item which was being offered at 30% discount is such an example. These small leakages are all reducing the amount of money you will have for the bigger things like education or retirement.
14. Focusing too much on money: Money is no longer a commodity to buy things. It is a scorecard of one`s life. That will cause stress, and yoga might help. However if you will seek a branded yoga teacher - so that your friends think you have arrived, yoga it self could cause financial stress!

PV Subramanyam is a financial domain trainer and can be contacted at pv.subramanyam@irisindia.net

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14 Common Financial Problems!

Most people out there always talk, or worry about how much money they make.  They compare salaries for jobs.  They get second jobs to supplement their income.  They leave jobs to go make more elsewhere.  Everything they do in life is based on the final end of year income.  How much did that W2 or 1040 claim you made for the year?

Well, I’ve learned that this is the absolute worst way to judge your financial situation.  In fact, it doesn’t matter how much you make.  Your financial situation has very little to do with your income.

It has everything to do, though, with your expenses, or what I like to call your ‘outcome’.

Expenses are the key to getting rich. As Robert Kiyosaki said in his book ‘Rich Dad, Poor Dad’, the definition of wealth is how many days you can live without working.  In order to live everyday without working, you must have more passive income than expenses.  Passive income is defined as income you gain without having to do any physical work (i.e. collecting rent checks, music royalties, stock dividends, etc.).

In our education system, they teach us to do well, go to college, and get a prominent job with a great salary.  However, let’s look at some of the jobs.  Most doctors go to school for umpteenth years, and then get out and have to build their practice.  They make nice incomes, but they also usually have very high expenses due to student loans and the cost of their education.

A doctor may make over $200,000 / year.  But add in a family, education bills, insurance cost, taxes, natural debt, and everyday expenses, and your ‘Outcome’ is maybe about $50,000/year.  Now let’s take a cop. A cop does not have to go to school for that long, if at all.  He makes a salary of somewhere b/t $60 -$100k (at least in NJ). That sounds like a lot less than the doctor, but it’s not.

The cop has very little, if any, expenses.  Being a cop, he gets a lot of ‘privileges’ and connections in the town.  He spends very little money on anything except everyday expenses.  He also only works 4 days/week, so he has 3 days to do something else to supplement his income.  At the end of the year, he probably had the same ‘outcome’, if not better, as the debt-ridden doctor.

Now, not every doctor is left with student loans.  Not every cop is debt free.  It is not necessarily the job I am criticizing.  I am speaking about the thought process this country teaches in its education system.  They expect you to want to go out and make the highest salary, but they don’t teach you anything on how to handle your expenses, how to properly buy a home, or how to balance your finances.  They expect you to learn it on your own.

Until a good friend handed me ‘Rich Dad, Poor Dad’, my financial education was non-existent. I thought you got rich by making the most money every year.  I didn’t know anything about passive income, balancing finances, or even what the real definition of being rich is.  After I read this book, and countless others like it, I started to understand what it means to be wealthy.  I made it my goal to further my financial education every day.

This made my goals easier to choose. It made decisions easier to make. I now had an education to base them on. The one thing that definitely stood out was….it’s not your income, it’s your ‘outcome’. It does not matter how much money you make, it’s how much you keep. Controlling your expenses is the key to getting rich, not your income.

I’m curious about everyone else’s take on the lack of financial education most Americans have.  Feel free to comment on any situations you have experienced in your life that may be related.  I’d love to start a discussion on this topic so we can all learn a little more…..

~ yinvsyang.com

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It’s Your ‘Outcome’, not Income that Matters.