When times are great and there is a lot of cash flow, it is difficult to care whether you have excellent financial control. Lack of controlling finances shows up during tough times. It is important to recognize signs that you have lost financial control in your company.
Signs that you have lost financial control
Each time you look at the bank statement, you do not have an idea how the money you had in the bank was spent. Moreover, you are not sure how much will be there in the bank next month.
In this case, you need to build a good cash flow forecast. As much as this may not be good news, you will know where your business is heading. After knowing this, it is important to have plans that can help you achieve it. The cash flow forecast ought to be projected monthly or weekly. This offers you a chance to move forward to make a better financial position. It is advisable to use excel spreadsheet, which is versatile and flexible to plan your future income and expenses.
Employees seem to better than you
This can be the case if your personal expenditure is not well-aligned to your business finances. You need to determine the right amount to inject into your business. Avoid draining your company with excessive drawings to satisfy your personal needs. Some experts recommend having a personal survival budget that can help you reduce your spending and debt. Only withdraw from your business what is sustainable by your company. As the business grows, you can increase the drawings.
Large interest payments
If you struggle to pay the minimum monthly installments, then it is possible you have lost your financial control. You need to look at the amount of debt you have, both personal and business. By consolidating, it is possible to reduce the interest rate.
No idea of your expenditures
It is your duty to take care of your expenses. Ensure you have a log of such expenses. Although this may be cumbersome, you will come to understand where you are wasting your money. In fact, its small items, which add up to large amounts. Thus, when you look at the expenses over a particular period, you come to understand their magnitude.
Less cash even with increased sales
This is a scenario of a company living hand to mouth. This means that you are investing in growth. However, the level of growth is yet to materialize. Ensure you measure your payback on every item of investment that you have made.