Centennial Revenue Management offers more than consulting on cash flow; it is the GO-TO for all money management advise for the business community.
Debra is passionate about helping business owners and their teams to better understand their numbers and how to use that knowledge to grow and prosper. As such, the team at CRM provides ongoing cash flow and revenue management insights, tips and tools to help you build your financial muscle.
Using her professional background and current experiences mentoring business owners, Debra shares ways she has helped her clients from around the country with quick how-to’s on following the money to improve cash flow.
Are You Ready to Gain Control? Start the road to financial freedom and cash flow confidence using Debra’s guide to get your business on track. Join the conversation and sign up for newsletters filled with informative tips and ways to achieve the “Dirty Little Secrets of Cash Flow”.
Gain confidence with a 5-Minute Read. Update your cash flow knowledge in a library full of monthly blogs from Debra’s resourcesful Knowledge Bank. Such blogs discuss:
How Much Cash on Hand is Enough?Cash reserves/cash on hand are the amounts of cash accessible to a business once outstanding balances have been paid. It’s an important metric to measure and determine what amount is enough for emergencies or dips in business. How much you need on hand?Read More…
The Bad Money Habits You Need to Break – I’ve seen those bad habits broken with big payoffs. What follows is a selection of some of the most common bad habits I’ve encountered during my time as a cash flow specialist, as well as how to address them.Read More…
The Role of your Bookkeeper – Most business owners think of their CPA as a go to expert for financial reporting, when in fact they should be going to their bookkeeper – The keeper of the cash flow. Read More…
Where is your Company positioned in the Cash Flow Arena?It is not uncommon for a company to show a net profit on their income statement and still find that they are having shortfalls of cash each month. Why is that? The art of managing cash flow is to look 90 to 120 days into the future. My cash flow modeling methodology forecasts 8 months into the future to predict a likely outcome. Full Article…
Centennial Revenue Management works with small business owners across industries whose needs extend beyond the basics of revenue management into total control and fiscal health.
We offer a range of cash flow consulting services such as cash flow management and forecasting as well as outsourced CFO services in Denver, CO and virtually across the country. Let us show you how to make more confident, lasting financial decisions for your company and grow a more financially healthy business. Interested in working with Debra? Click to find the right financial package for your business!
Are you ready with your 2021 projected tax liabilities?
Do you know what your projected tax liabilities will be for 2021? Now is the time to be proactive with your CPA and request a tax review for 2021.
As we go into the fourth quarter, it is more important than ever to pay attention to your bottom line and cash flow. Optimizing cash flow takes implementing proactive strategies. Oftentimes, a CPA working independently is not proactive about helping you plan for cash requirements for taxes that will be owed in April of next year.
Concerned about your business as tax season sneaks up on us? As a Cash Flow Specialist / CFO, I am committed to helping business owners understand their financials from a CEO’s perspective, different from your CPA’s.
Think about it this way; your CPA is focused on reducing your Net Profit to help you pay less in taxes. From a cash flow perspective, you need to focus on increasing your Net Profits that will result in better cash flow. Working together with these two subject matter experts, can help you to maximize Net Profits, optimize cash flow AND get more money into your pockets!
You can now plan for how much cash reserves you need to set aside for April of 2022.
You can also create proactive strategies to offset some of those taxes owed before the opportunity disappears by December 31st.
Now more than ever, it is important to keep yourself financially educated to have a healthy business in 2022. The PPP loan could be considered a great “cash flow” gift. Do not squander it by not looking into the future and understanding what lies ahead as your business continues to find its new normal. Achieving cash flow wellbeing takes a team of trusted advisors.
To help you on this journey, and back by popular demand, I am offering my SWOT (Strengths, Weaknesses, Opportunities, Threats) Cash Flow Forecasting Package discounted to $1,500 to help business owners continue to pivot and navigate during these unprecedented times. This is a one time analysis of your current financials.
I will deliver an eight-month cash flow forecast
I will deliver an eight-month cash flow forecast that is directly tied to your financial story in order to educate you on your minimum cash on hand balance needed to sustain your business in the months ahead. I will do a deep dive into your financials, create a working forecast model, and will deliver it to you in a 2 hour consultation. This process will identify three very important numbers:
What your sales revenue break even number is.
What your monthly outlay of cash is including debt servicing, and distributions.
What your monthly cash on hand balance is and will it sustain you 8 months from now.
Understanding how to manage cash flow takes more than just reading a profit and loss.
It is not uncommon for a company to show a net profit on their income statement and still find that they are having shortfalls of cash each month. Why is that? Where did the money go if it is not in the owner’s bank account?
Many business owners now have a lot of money in their bank accounts due to the PPP Loans, EIDL SBA money and / or grant money that has been a lifeline. I will also speculate that most businesses will get their PPP loans forgiven and that will be a great cash flow gift. But will it be enough to sustain your business into next year?
Cash flow is the lifeblood of any company. Just because you may have more money in your bank account than ever before, does not equate to good cash flow. If you have experienced cash flow issues, or you want to make sure they are not lurking around the corner, today is a great day to begin building this financial muscle.
Start with answering these questions:
What is your cash on hand balance from last month?
What are your average cash revenues (not accrual revenues), monthly?
What is your average outlay of cash, not total expenses each month?
What should my monthly cash reserves amount be to not run out of money?
Were you having a cash flow problem/challenge before COVID?
Having trouble with answering any or all these questions?
Here is a Hint: It will take more than looking at your Profit and Loss statement to get the answers. You will need to understand your Balance Sheet to help give you the answers. Learn more about following the money to your Balance Sheet.
Let me help break this down for you:
Your Cash on Hand Balance: This is one of the “key numbers” in the cash flow equation. The ending / beginning cash balance for a month will come from your Balance Sheet (not from your online banking account). This is the starting point for knowing how much money you will have in the current month to work with in your cash flow equation.
Example: Say we are assessing cash flow for August. You will need to look at the Balance Sheet ending July 31st, the month prior to get the total amount of all your bank account balances. This will equal the beginning cash balance for August. Make note, this will include all outstanding checks that are in play but have not hit your bank account.
Your Average Cash Revenues: This is the second “key number” in the cash flow equation. Sticking with #1 scenario, that we are working on projecting cash flow for August; what are your projected revenues that you are planning for that will clear your bank account by August 31st? This means following the money into your bank account; not what you booked but have not collected. I like to use an average of the last 4 months of revenues to start my projection in helping me to forecast revenues.
Note: This number is going to be tied to your accounting system; what your bookkeeper has closed the previous months on your Profit and Loss and showed as income.
Your Average Outlay of Cash: This is the third “key number” in the cash flow equation. This is where the Balance Sheet comes into play. Outlay of cash is different than total expenses. Total expenses come from the Profit and Loss. You are looking at Revenues – Expenses = Net Profit. Outlay of cash is more than that. It includes the cash that is posting to your Balance Sheet each month such as debt servicing, asset purchases, shareholder dividends/distributions to name a few. If you have a loan, the principal payment is posted to the Balance Sheet (the interest is posted to the P&L). Do I have your attention?
Example: To calculate total outlay of cash, take your total expenses you are budgeting for August + loan principal amounts + shareholder distributions = Total Cash Outlay.
Your Monthly Cash Reserves: This “key number” is different for every business. You need to educate yourself on what will work best to help OPTIMIZE cash flow.
Example: Should this number be 3 x your monthly payroll expense? Or it could be 1 x your monthly cash outlay. What is going to help you sleep like a baby at night knowing that you will not run out of money? That is what this amount needs to be on a monthly basis.
Let us put it all together for our monthly cash flow projection. For this example, I am going to stipulate that the beginning cash balance includes PPP funding of $80,000. (Prior to COVID, the beginning cash balance might have been as low as $45,000):
Beginning Cash Balance: $122,562
Cash Revenues Projected: + $110,000
Subtotal of Cash for August: $232,562
Average Outlay of Cash: – $125,000
Projected Ending Cash: $107,562
This is just for one month, the current month. You can see the importance of adding debt servicing and distributions to the outlay of cash. This number is higher than the revenue number. What if your revenues come in short and your outlay is the same? It is not uncommon for business owners to spend the money as fast as it comes in. How will you handle additional expenses (i.e. quarterly tax estimates, payroll bonuses, etc.) that are in addition to the monthly budget? You will inevitably start to chip away at your cash reserves
Before COVID, were you having a Cash Flow Problem?
If the answer is yes, then it is important to change some of your money habits that contributed to the cash flow shortage. Were you “winging it” with your financials? Did you have an Accounts Payable process in place to control the outflow of money? Did you have a debt strategy? Or if you wanted it, you bought it and accrued credit card debt or maxed out a line of credit?
Now that you have received funding, if you do not change some of those money habits, you are likely to re-create a cash flow shortage. It may not happen for 6 – 12 months as you whittle away your stash of cash. In my experience, it is likely to happen!
Managing cash flow is not about the next 30 or even 60 days. That money is already in play! You have already committed to payroll, vendor bills, and you may or may not have control of your revenues due to the Pandemic. The art of managing cash flow is to look 90 to 120 days into the future. My cash flow modeling methodology forecasts 8 months into the future to predict a likely outcome.
Find confidence and comfort in your business’s cash flow arena. Schedule your complimentary consultation by calling 303-835-7992.
Right now, the business owners I speak to are panicked.
I hear from them that they don’t have control over their financials. Perhaps, they have been delegating bookkeeping to an admin on their team. And when times are good, they don’t worry about reviewing reports.
I hear from them that they don’t have control of their future. There is no set date for when the country will reopen. Many wonder what their new normal look like.
I hear from them that they’ve lost control over their incoming revenues. They’re not open for business or doing very little. Their clients may be canceling contracts or unable to pay their bills, and their lead funnel may be dwindling as people prioritize saving overspending.
But there is a secret I share with my clients that I would like to share with you, too. You can control your outgoing cash. You can control your cash flow.
I recently had a conversation with a business owner who had many of the fears and doubts outlined above. The fear was powerful and palpable, and it was blocking him from seeing the facts. Going into COVID-19, he didn’t have an understanding of his finances, so when doors closed, he assumed the money was gone. And that made him operate from a place of fear.
To get out of that fear mindset, he participated in my financial education webinar, which helped him get a 360-degree view of his current financial picture. He then did a one-on-one SWOT session with me to analyze his financial strengths, weaknesses, opportunities and threats.
This SWOT session is where the truth comes out – the good, the bad and the strategy. We tell ourselves so many stories that it can be difficult to see what is really happening. And when it comes to cash flow, clarity is key.
Based on our session, it was clear that he did indeed have money. What he didn’t have was revenue. And when I presented the cash flow forecasting model, he could see the possibilities of not running out of money.
That meant that what we could control was his outflow of cash. My advice was to:
Contact his bank and inquire about loan deferrals on business debt
Ask his landlord about a rent deferral
Talk to his vendors to see how far they would bend to help slow down money going out
Follow up on invoices that were set to come in soon from his accounts receivable
Those four ideas exposed tens of thousands of dollars that are now available to float his business until he could be funded with the PPP loan.
The bottom line is this: the conversation changed from a fear-based, reactive mode of “I don’t have money” to I have money and can control the outflow.
You too have money and you too can control the outflow. I invite you to schedule a consultation with me today to explore your financial situation, find your cash and break free of fear.