Video transcript:
00:01 Hey there, I'm Jed, and welcome to the channel, where we talk about productivity, uh, we talk about clickup setup, project management, and then a few things related to entrepreneurship.
00:11 This is a question I get a lot, which is, do I track my cashflow for my business? And so, if you're in a services business like I am, um, cashflow can be really important.
00:24 In fact, for most businesses, cashflow is really important. It just looks a little bit different for each individual. So, what I'm going to do is, I'm going to show you, for a services business, really quick, something you can, you can learn in terms of how to manage your cashflow.
00:42 So, uh, let's start here. Cash in bank. I'm going to say, for this scenario, um, I've got $15,000 in the bank.
00:54 Now what I'm going to do is I'm going to track dates where cash is going in and going out. And you should have a business bank account at this point.
01:05 Um, that's where you're going to see your inflows and outflows. Maybe you have a couple of accounts. Um, but this cash management is important.
01:11 So, let's say, right now it's November, so let's do this for December. And I'm just going to copy this down a few.
01:19 And a couple things. I know that on December 1st, I'm going to have a rent payment. So, I'm going to put a negative.
01:30 Which is $2,500. Alright, so that's showing there. And you can even, I've done this for my own tracking. I actually create a conditional, um, value here.
01:45 So, whenever it's negative, I'm going to, that's annoying, of course I can't remember how to do it when I'm doing a video.
01:54 What you do is you go to format, and then conditional formatting. And then, you know, if not, at empty, whatever you can do.
02:02 If it's greater than 0, then it's going to be green. If it is less than 0, it's going to be red.
02:15 And that's a little too dark. Let's do this. Done. Cool. So now we've got that conditional formatting here. And then I can copy that to all of these.
02:27 So, I'm not going to do that because my pointer is a little messed up, but, uh, you'll get the picture.
02:33 So, this is rent. Okay. And let's make this column a little wider. Turn off responsive so I can actually do this.
02:45 Hopefully y'all can still see. Rent payment. Due. Okay. Cool. So that's there. And now what I'm doing here is I'm tracking cash I have in the bank at the start of the month, or let's say November 30th compared to the inflows and outflows.
03:08 So if I make this a little smaller, you should be able to see, bear with me here. What, what's going on here is if I highlight this and highlight this, it's going to give you a sum.
03:24 Now, if you click here, you can obviously change what it is. Maybe you want the average or whatever, But right now, what we want to do is, is the sum.
03:33 So you can see $15,000 minus $2,500 equals $12,500. Meaning on December 1st, with this single entry, we're expected to have $12,500 cash in the bank.
03:46 Okay, so next let's do, let's figure out a payroll. Let's say our payroll is going to be on December 9th.
03:54 That's another big outflow, especially for a services business. So here let's say our payroll is minus $11,600. Okay, so now we see that on December 9th, if we have no money coming in, we're going to sit with $900 in the bank.
04:14 So now you can start to see around December 9th, things are going to start to get a little bit sticky.
04:19 But wait, maybe we have revenue coming in. Okay, cool. Maybe there There's a late payment, and Bill said he's going to pay us $1,500, and let's see the client, client X, Y, Z, late from September.
04:41 We know we got some money coming in. Bill's committed it. He's already sent us, you know, something from November 30th saying that, you know, the money's coming in.
04:50 And let's just do this conditional formatting. Now it's showing us $1,500. The other thing we're going to do, let's make this dollars and cents.
04:58 And then, I like to see the round numbers, I don't need to see the cents. Okay, so now you can see if I highlight these, it's $15,000 minus $2,500 plus $1,500 minus $1,106.
05:10 So now around December 9th, I've got $2,400 in the bank. Let's just do a few more and arrange it across the month so you can see a full month.
05:18 Let's say if December 9th is payroll, then we're probably going to payroll on the 23rd. And then here maybe our bank account, or we have got a credit card payment, so minus maybe.
05:31 $850 credit card due. This is again, we're just going to copy this, right? Because it's the same, let's presume. Or maybe you had a contractor who isn't working on a project after the 9th.
05:48 So let's just assume a slightly smaller number. $8,500. And then let's list a bunch of other clients that are coming in.
05:57 So we got this late client coming in there. and then maybe you have net 50. So you're going to assume that a lot of your revenue is going to come in around this same time.
06:11 Let's just put in a bunch of random numbers. You know, maybe they're all the same. Maybe you charge a flat rate for your same service.
06:21 I don't know. Okay, and this is like client 2, client 4, client 6, client 7. client 9, client Y, client Z.
06:37 Okay, so we got all this money coming in, 13,000, and this is all the entries and exits that we're having here for the month.
06:49 And let's, let's say the credit card includes software, subscriptions, other stuff. And you might have different entries for your business, but now you can see what, what we're going to do now is we're going to do a sum of everything here.
07:06 So now this is showing us balance, this is our end of December cash balance. Okay. Let's hold that as well.
07:25 So now it's factoring in all the ins and outs of cash. and so you can see. If everyone pays on time, and we, you know, have our payroll, et cetera, we're going to be okay by the end of the month.
07:41 We're going to be at a lower cash balance than when we started, but we're going to have enough cash. I was doing min again, what we want to sum.
07:50 So December 15th we're going to be feeling good, because we're back up to $15,000, even a little higher. But then we know we're gonna we're gonna take a hit December.
07:59 And so now when we go into January we And we've got that rent payment due again. We know, hey, January 2nd, we're going to be pretty tight.
08:12 So this is really important. Uhm, I just, I think it's, it's a problem I see a lot with businesses, small businesses, just not staying on top of their cash flow.
08:23 Especially if you have clients who aren't paying monthly, or a SaaS product, whatever it is, irregular revenue, you're going to want to set to stay on top of this.
08:32 Uhm, what's nice about this method is you're able to keep track on a day-to-day basis. So if you're like, hey, you know what, this big client actually, often they're late.
08:44 They're not going to pay until probably the 30th. Okay, cool. I'm going to move this down. I'm going to double check my formula because sometimes it changes.
08:51 Okay. Yep. See, it did that. So we're still good at the end of the month, but guess what? When When we hit payroll, it's going to get pretty tight because we know this is going to be So hopefully this is a helpful quick tutorial on how to manage your cash flow.
09:10 Um, like I said, it's a question I see a lot. Cash is the lifeblood of small businesses when you're, you know, I recommend using a cash style accounting method to track just kind of like, unless you've got a huge nest egg.
09:23 Um, you know, I would, I would think about using a cash method for your accounting to just, because you need to see where you're because the worst, case scenario is really if you get to December 23rd and if client six doesn't pay and client four doesn't pay and, oh, client three actually is going to
09:42 be later at the end of the month, you can see you're running aground and you're not going to be able to make payroll for that date, which is the death knell of most businesses.
09:52 So hopefully you found this informative, uh, always set me up with questions, love to hear from people who are watching.
09:59 Oh, I should say, quick plug. I'm Jed. I'm founder of hydrant. Um, we do project management, staffing, software development, and a little bit of, uh, other things, click up, set up, et cetera for our clients.
10:13 Thanks for watching. Please subscribe. It helps us out a lot. Ask questions. We're still a really small channel, so really appreciate your engagement.
10:20 Thanks so much. Bye.
