It is distorted (respectful honesty) to think that cash flow problems “just happen”. Rarely is a cash flow problem a sudden event. It is almost always something that accumulates over a period of time.
And as many will admit, it is not difficult to see it coming.
A good friend of mine once compared this to the statement by Joe Frazier “The punch that knocks you out is the one you didn’t see”. He pointed out that if you see the punch coming, you can at least react. You even have a chance to get out of the way.
Similarly, if you don’t see a cash flow problem coming, then you don’t see it until the problem has arrived on your doorstep.
Most people don’t have a good view into what their cash balance is going to be so the problem smacks them on the side of the head without warning. That’s how financial goals get destroyed.
Even if you believe you will have a cash shortage in the future, you still must see it as far in advance as possible. You must see it clearly for what it is, how much it might be, and precisely when it is likely to happen.
The most important single step you can take to head off a possible cash flow surprise is to ask and answer this very simple question:
'What do I expect my cash balance to be six months from now?'
Answering this question will force you to “Keep Your Eyes On the Road”. It will force you to look at your budget and cash flow plan in a new & generally very revealing way.
The secret is being pulled out of the past and forcing yourself to look at the future. To see a free step by step class on how to do this and realize amazing cash flow results, check out www.CashFlow-Magic.com and register to watch yesterday’s webinar replay now.
The key to solving this major problem before it becomes one is to create a schedule that shows your projected revenues and expenses in the context of your beginning and ending cash flow average for each month.
I can’t stress enough how critical this is to really taking control of your money. The fact is, banks are in business to make money. Our money. Therefore, as long as you choose to simply follow their rules you WILL pay too much. It’s hard to overstate just how important the process of strategic cash flow planning is to everything you do inside your financial goals.
Surprising to some, your financial statements are not the answer.
A cash flow projection is very different than the basic financial statements you use to manage your money. The best approach to creating a cash flow plan is to begin with the average cash flow over the past 3-24 months. By averaging your cash flow you can create a baseline understanding of what to expect and what is needed.
We have built a very handy tool called the Cash Flow Cruncher which is an awesome spreadsheet. I will give you a free copy of that you can use from now on by just watching the free training at www.CashFlow-Magic.com
The problem with financial statements is that they are always historical, meaning they’re always presenting what happened in the past.
They are a bit like the rear view mirror. The rear view mirror is very useful when you need to see what is behind you. However, when you are driving down the road, your focus always needs to be on what’s in front of you.
An occasional glance in the rear view mirror is all that’s required. Look in the rear view mirror for too long, however and you will soon be crashing into something in front of you.
Cash flow PROJECTIONS provide the visibility you need to avoid cash flow problems.
Remember, cash flow problems rarely “just happen”. If you would like to learn the secret to maximizing your cash flow projections easily and for free you can attend a free no sales class online at www.CashFlow-Magic.com
This training is FREE for a limited time.