So You Think You're A Good (Cash Flow) Driver? Try This Quick Quiz

INTRODUCTION:

Most business owners will tell their small business accountants that cash flow is one of their biggest concerns when it comes to challenges they consistently face. Every now and again when it's put to them, 'are you doing enough to address the problem'?, many either have a head in the sand approach or say they are doing what they can.

How are you handling your business cash flow?

Let's see how you go with this quiz. Select one answer from each of the following six questions.

Figure 1: Time to test yourself!

1. You Are Worried Customers Will Leave If You Ask Them To Pay Upfront

1. Very;
2. Everyone else gives 30 days;
3. Will do this with new customers only from now on;
4. This is not an option.

2. You Ask Suppliers For Longer & Better TRading Terms

1. Every 6 months;
2. Never;
3. Will do this with new suppliers from now on;
4. Are you completely mad? Of course they won't give me longer terms!

3. You Always Quote Upfront With Customers With No Surprise Bills

1. We charge after the job is finished;
2. We give an estimate only but bill what's on the timesheet/jobcard at the end - that's what our small business accountants do!;
3. We stop if our quote will be different and advise the customer prior;
4. We stick to our quote no matter what.

4. YOU Are Willing To Employ A Debtors Clerk

1. Yes we are - time to take action. The scarier looking & sounding the better;
2. Maybe - only if they have links to the Mafia;
3. Clients will leave us if we do;
4. Waste of money - can't see the point.

Figure 2: Might be time to bring the big guns in and chase the money. Photo courtesy Balmain Baz & Lara Scolari Gallery Balmain

5. You Take Action As Soon As Debtors Go Outside Terms

1. Only when cash flow is tight;
2. I'm too embarrassed to ask for payment;
3. I'll ring Tony from The Sopranos right away - he'll fix it;
4. Yes and we will put in systems to action this and refuse credit where appropriate and keep my small business accountant Sydney and Dubbo happy!

Figure 3: Maybe Tony can get some cash in the bank!

6. You Prepare Three Way Budgets With Your Small Business Accountant Each Year

1. What's a three way budget?
2. Don't want to spend the money - the business can't afford it but happy to look at with the cash flow forecast;
3. My accountant's boring - the less time and money spent with them the better;
4. Yes I do. I use the cash flow forecasts also as a strategic planning tool with my small business accountants Sydney & Dubbo.

Points:

Q1 (a) 5 (b) 0 (c) 10 (d) minus 5;

Q2 (a) 5 (b) 0 (c) 10 (d) minus 5

Q3 (a) minus 5 (b) 0 (c) 5 (d) 10

Q4 (a) 10 (b) 5 (c) 0 (d) minus 5

Q5 (a) 0 (b) minus 5 (c) 5 points (d) 10

Q6 (a) 0 (b) 5 (c) minus 5 (even if they are boring) (d) 10

CONCLUSION:

How did you go?

Minus 30 to 0 Go to your accountant, parents or Lotto office straight away. Get the beers ready for the Sheriff.

1 to 30 You'll have some cash some days but not others. Putting water in the sauce bottle may help (just a bit).

31 to 50 You are going pretty well and nearly there - less nervous waits while the EFTPOS card processes....

51 to 60 Time to get a banking licence!