how you can avoid scratching for money to pay your wages and suppliers

© Copyright One Sherpa Pty Ltd 2010

How you can avoid scratching for money to pay your wages and suppliers


Have you ever experienced this?

Your accountant tells you that you’ve made a great profit but you have no cash


Have you ever been confused when you went to your accountant?


Do you wonder why they tell you you’ve made a huge profit and then wonder where the money’s gone?


Do you wonder where money get’s stuck in your business?


A key area where money get’s stuck in your business is working capital


Do you know how much inventory you have?


Do you know how much money is owed to you by your customers?


Do you have a way of knowing what terms to give your customers so you don’t run out of money?


You may have spent money on equipment or motor vehicles during the year and these amounts can NOT be deducted from your profit.


This may explain where the money has gone.(Even if this was supposed to give a tax deduction)


Buying Equipment and Vehicles is NOT covered in One Minute Business Checkup because most business owners are aware of these large items


The area where money get’s slowly sucked into the business is working capital


This is a part of the accounts that many small business owners don’t look at or understand


Once you check your Money Flow measure you will clearly understand how money get’s stuck and what to do about it


Let me show you how to check the Money Flow Measure in One Minute Business Checkup


PROBLEM #5


Inventory is too high.

How many days are tied up?

CALCULATIONInventory DIVIDED BY Annual Other Costs TIMES 365 = Number of Days

ANSWER$100,000 / $570,000*365 = 64 Days


Let’s get days down to 45

45 Days / 365 Days * $570,000= $70,274

Original Inventory $100,000New Level $ 70,274Reduction $ 29,726


$29,736 less Inventory45 Days


Accounts Receivable are too high.

How many days are tied up?

CALCULATIONAccounts Receivable DIVIDED BY Sales TIMES 365 = Number of Days

ANSWER$150,000 / $800,000*365 = 68 Days


Let’s get days down to 45

45 Days / 365 Days * $800,000= $98,630

Original Accounts Receivable $150,000New Level $ 98,630Reduction $ 51,730


PROBLEM #5

$51,370 less A/c Receivable45 Days


Checkout your own information now.


Using the sandbox you can ‘play with the numbers’ until you get your Money Flow Measure correct


Go to www.oneminutebusinesscheckup.com

and make sure you’ve got no excess money stuck in your business