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Similar a How you can avoid scratching for money to pay your wages and suppliers (20)
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How you can avoid scratching for money to pay your wages and suppliers
- 1. How you can
avoid scratching
for money to pay
your wages and
suppliers
© Copyright One Sherpa Pty Ltd 2010
- 2. Have you ever experienced this?
Your accountant tells you that you’ve made a great profit
but you have no cash
© Copyright One Sherpa Pty Ltd 2010
- 3. Have you ever
been confused
when you went
to your
accountant?
© Copyright One Sherpa Pty Ltd 2010
- 4. Do you wonder why they tell
you you’ve made a huge
profit and then wonder
where the money’s gone?
© Copyright One Sherpa Pty Ltd 2010
- 5. Do you wonder where money
get’s stuck in your business?
© Copyright One Sherpa Pty Ltd 2010
- 6. A key area where
money get’s stuck
in your business is
working capital
© Copyright One Sherpa Pty Ltd 2010
- 7. Do you
know how
much
inventory
you have?
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- 8. Do you know how much money is owed to you by
your customers?
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- 9. Do you have a way of knowing what terms to give
your customers so you don’t run out of money?
© Copyright One Sherpa Pty Ltd 2010
- 10. You may have spent
money on equipment
or motor vehicles
during the year and
these amounts can
NOT be deducted
from your profit.
© Copyright One Sherpa Pty Ltd 2010
- 11. This may explain where the money has gone.
(Even if this was supposed to give a tax deduction)
© Copyright One Sherpa Pty Ltd 2010
- 12. Buying Equipment and Vehicles is NOT covered in
One Minute Business Checkup because most
business owners are aware of these large items
© Copyright One Sherpa Pty Ltd 2010
- 13. The area where money get’s slowly sucked into the
business is working capital
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- 14. This is a part of the
accounts that many
small business
owners don’t look at
or understand
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- 15. Once you check your Money Flow measure you will
clearly understand how money get’s stuck and what to do
about it
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- 16. Let me show you how to check the Money Flow Measure
in One Minute Business Checkup
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- 17. PROBLEM #5
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- 18. Inventory is too high.
How many days are tied up?
CALCULATION
Inventory DIVIDED BY Annual Other Costs TIMES 365 = Number of Days
ANSWER
$100,000 / $570,000*365 = 64 Days
© Copyright One Sherpa Pty Ltd 2010
- 19. Let’s get days down to 45
45 Days / 365 Days * $570,000= $70,274
Original Inventory $100,000
New Level $ 70,274
Reduction $ 29,726
© Copyright One Sherpa Pty Ltd 2010
- 21. Accounts Receivable are too high.
How many days are tied up?
CALCULATION
Accounts Receivable DIVIDED BY Sales TIMES 365 = Number of Days
ANSWER
$150,000 / $800,000*365 = 68 Days
© Copyright One Sherpa Pty Ltd 2010
- 22. Let’s get days down to 45
45 Days / 365 Days * $800,000= $98,630
Original Accounts Receivable $150,000
New Level $ 98,630
Reduction $ 51,730
© Copyright One Sherpa Pty Ltd 2010
- 23. PROBLEM #5
$51,370 less A/c Receivable
45 Days © Copyright One Sherpa Pty Ltd 2010
- 25. Using the sandbox
you can ‘play with
the numbers’ until
you get your Money
Flow Measure
correct
© Copyright One Sherpa Pty Ltd 2010
- 26. Go to
www.oneminutebusinesscheckup.com
and make sure you’ve got no excess money
stuck in your business
© Copyright One Sherpa Pty Ltd 2010