Halloween Candy Techniques Have More in Common With Managing Your Cash Flow Than You Think

Halloween is coming, and since it’s become more of a season than just a one-day holiday, you may have noticed that keeping the candy flowing on the big night can be a bit of a challenge. In this article, you’ll find out how your cash flow statement helps with the same kinds of issues that come up with keeping the neighborhood kids happy!

Your Candy Flow Issue: Buy it too early, and you’ll eat it all by the second week of October. Buy it too late, and you will be stuck handing out chocolate-flavored taffy and raisins. If you don’t buy enough, you’ll have to turn off your porch light or face the hordes of princesses, cowboys and witches looking for a treat.

So, you buy plenty of delicious chocolate and fruity candy options and hide it from yourself until dusk on the 31st. You turn on your porch light, fill your biggest bowl and wait in expectation for the bell to ring. By 8:30, when your bell has run only four times, you stare down into your big bowl and realize you’re going to be really tired of Skittles and KitKats by Thanksgiving.

Don’t Let it Spook You: Your cash situation might remind you a bit of this Halloween example, but with one important statement, you’ll forget you ever saw the connection. A cash flow statement offers a clear analysis of how much money is going in and out of your business each month. It shows your income, your operating and financing activities, as well as your investments.

It gives insight into some key areas:

·       Available cash, allowing you to plan for future expenses.

·       Identify trends, such as expenses that have increased or an area where you could introduce a new efficiency.

·       Look at data over time, such as income growing or shrinking in certain areas.

·       Offer information to lenders or investors wanting to see evidence of your financial health.

Your cash flow statement is used in combination with your income statement and balance sheet to form a more complete picture of your business. There are many benefits to solid financial reporting, such as the ability to quickly make a decision when you encounter an investment opportunity.

Financial reporting also prepares you for tax filing, applying for loans and making a decision whether to hire more staff. Your cash flow statement helps you identify when your utility bill has significantly increased or you have finished paying off a debt and have more available cash.

At The Power CFO, we know how hard it is to find time to manage all the parts of your business. After all, we’re a small business, too. With a strategic partner who takes a holistic approach to your accounting and financial operations, you will receive the critical guidance that helps your business grow. Contact us to learn more!