Free Cash

Recently, I was talking to a business owner, and they said to me they didn’t understand what their balance sheet is for.

To me, the balance sheet allows you to work out one of the key pieces of information about your business. This is what I call your Free Cash.

Free Cash is your bank balance plus debtors / accounts receivable, less money you owe including:

creditors / accounts payable,
unpaid superannuation,
unpaid PAYG staff income tax,
unpaid GST
unpaid income tax.

If your free cash is negative, this means that to pay your bills, in the absence of any debt facilities, you effectively need next week sales to pay for last week’s bills. So, if your sales drops next week for any reason, you may struggle to pay last week’s bills. If this is your business, you need to implement a strategy of how to improve your Free Cash balance.

If you free cash is positive, this is an indication that there may be more cash that you can take out of the business.

And to me, understanding your Free Cash is one of the key reasons to look at your balance sheet. And if your balance sheet is not accurate, you can not accurately determine your free cash.

If you want a confidential discussion on your business situation, or help to increase your free cash me below.

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Contact Wayne Wanders for your FREE Business Survival Session

To ensure I help your business specifically, the best approach I have found is to have an obligation free session with you. In this session we will review your current business in a factual and objective manner, to better understand the challenges that you face. And this session does not need to be face to face. At the end of this session, you will have multiple ideas on how your business can survive and thrive in these uncertain times. Simply fill in the contact form below or email me at wayne@aRealCFO.com.au or call me on 0412 227 052 to organise one of these obligation free sessions.

To get help you successfully navigate your way through your financial challenges so your business can survive and thrive in these uncertain times, simply use the contact form on the left to email Wayne or call him on 0412 227 052.

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Let Wayne Wanders, a fully qualified and experienced CFO, help you successfully navigate your way through your financial challenges so your business can survive and thrive in these uncertain times. Wayne Wanders, A Real CFO wayne@aRealCFO.com.au

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