Mastering Business Cash Flow

The Entrepreneur’s Financial Playbook Strategic Wealth Stewardship by David Angway, RFP.

[0:00] – Why is cash flow management important for small business? Understanding the heartbeat of your company.

[1:30] – How to pay off business credit card debt? Navigating the "Pay Later" and debt trap.

[3:45] – Can a profitable business run out of cash? The difference between profit and liquidity.

[6:10] – How to improve accounts receivable collection? Managing the timing gap in sales.

[8:25] – How to track business income and expenses? Essential habits for new entrepreneurs.

[10:50] – How to reduce business overhead costs? Controlling fixed costs to stay liquid.

[13:15] – Is it a good idea to get a business loan? When to take financing or walk away.

[15:40] – How much cash reserves should a business have? Preparing for seasonal slow months.

[18:00] – How to stay resilient in business? Managing financial numbers during tough times.

[20:30] – How to find a business financial coach? Accessing David Angway’s exclusive mentorship.

The Conversation: Navigating Business Cash Flow

Aru: Welcome back to Entrepinoy Espesyal! We are honored to have Mr. David Angway, a Registered Financial Planner and expert in helping families and businesses navigate their finances. David, many entrepreneurs struggle even when they have sales. Today, we are talking about maintaining a positive cash flow.

David: Thank you, Aru! It’s a pleasure to be here. Cash flow is the heartbeat of any business. You can have a lot of customers, but if the money isn't flowing in correctly, the business can't breathe. I specialize in helping people navigate situations where they are buried in debt—whether it’s ten credit cards or "Shopee Pay Later" balances—and turning that around into a positive flow.

Frequently Asked Questions (FAQ)

Aru: What is the difference between profit and cash flow?

David: This is where many newbies get confused. Profit is what is left after you subtract expenses from sales. Cash flow is the timing of that money entering and leaving your bank account.

• The Gap: You might sell ₱100,000 worth of goods today (Profit), but if the customer pays you in 30 days while your electricity bill is due tomorrow, you have a cash flow problem.

• Survival: Profitability is the goal, but cash flow is what keeps the lights on day-to-day.

Aru: How can a new entrepreneur maintain a positive cash flow?

David: It starts with monitoring your "In-flow" and "Out-flow" religiously.

• Monitor Receivables: Don't let your customers' debts to you grow too large. If they don't pay on time, your business stops.

• Control Expenses: Be very careful with fixed costs. In the beginning, try to keep your overhead low so you don't need a massive amount of cash just to stay open.

• Consider Financing Wisely: Sometimes short-term financing is necessary, but it must be focused on increasing profitability, not just covering losses.

Aru: What should I do if I’m already buried in debt like credit cards or Shopee Pay Later?

David: First, don't panic, but do take action immediately.

• Audit the Debt: List down every single loan and the interest rates.

• Consolidate or Negotiate: Talk to your creditors. There are processes to navigate these debts so you can breathe again.

• Stop the Leak: You cannot fix a cash flow problem if you keep adding more debt for non-essential items.

Aru: How do you stay resilient when business gets tough?

David: Business is a marathon. You have to be resilient and stay focused on the numbers.

• Cash Buffer: Always try to build a "reserve" during the good months to cover the slow months.

• Focus on Profitability: Don't just chase sales; chase profitable sales. If a product costs you more in time and effort than it makes in cash, it’s a drain on your flow.

Clean Takeaways for Entrepreneurs

• Cash is King: Profit is a theory; cash in the bank is a reality. Prioritize the actual movement of money.

• Avoid the "Later" Trap: Be extremely cautious with "Buy Now, Pay Later" schemes. They are designed to feel easy but can quickly destroy a small business's cash flow.

• Short-Term Financing: Only use loans if they are directly tied to an activity that will generate more profit.

• Stay Proactive: Don't wait until your bank account is at zero to look at your financial statements. Monitor your cash flow weekly.

Aru: Thank you, David! We’ve learned so much about the importance of being resilient and mindful of our business numbers.

David: Thank you, Aru! For those who want to dive deeper, you can follow me on Facebook (David Angway) or subscribe for digital coaching sessions. I’m here to help you bless more people through your business!

For more financial tips and business coaching, visit davidangway.com.