Fill in your details below and one of our friendly consultants will call you back as soon as possible.
  • This field is for validation purposes and should be left unchanged.

Follow us on Twitter

  • RT  @CatherineHYoung : https://t.co/y91fqVrBDf live! Final bits of iAfriKart underway. I‘d never post something this personal. I just did.  @A … 2 days ago
  • RT  @ThinkroomTalk : Thank you teams Thinkroom and Kre8tive Design - you did it, although really basic and MVP, it was done! Check out https:… 2 days ago
  • Phezulu VBO is serving White River, Mpumalanga! Tony Tanner (CA (SA), SAICA membership) has represented Phezulu V… https://t.co/vW8xbLLB28 3 days ago
  • RT  @Phezulu_Group : #MeetTheTeam We would like to introduce James Scott from our Bryanston Franchise. James has over 30 years experience as… 4 days ago
  • RT  @Phezulu_Group : Looking for an accountant in Cape Town? Peter La Grange (NDip Cost & Management Accounting and member of SAIPA) has been… 4 days ago
  • RT  @Phezulu_Group : Hello PTA! Phezulu VBO is at 642 Cicely Street, Garsfontein! It’s your “one stop SME shop” offering: Business Advisory,… 4 days ago
  • RT  @Phezulu_Group : Focus on what earns the money and delegate as many tasks as possible to free up more of YOUR time! Click below for more… 4 days ago
  • RT  @GEN22OnSloane : Keith Jones, co-founder of  @Sw7co  gives a session on 'How to create high growth business in Africa https://t.co/n5Ia1hIG… 5 days ago
  • RT  @Discovery_SA : We've turned banking on its side! #DiscoveryBank hasn't just changed one thing, we’ve changed everything. Find out what t… 5 days ago
  •  @YZP   @TyronneNel  Thank you Sir, you're too kind 😉 6 days ago
  • Focus on what earns the money and delegate as many tasks as possible to free up more of YOUR time! Click below for… https://t.co/j1d6igYlPs 6 days ago
  • Hello PTA! Phezulu VBO is at 642 Cicely Street, Garsfontein! It’s your “one stop SME shop” offering: Business Advis… https://t.co/v0gFLI7rS0 1 week ago
  • RT  @TyronneNel : #SME Advice - Dear entrepreneur, travel widely - this is the cure for your limited understanding of your market! 2 weeks ago
  • https://t.co/5DDRLQcVgL 2 weeks ago
  • ✅REMINDER – PAYE submission is due TODAY!✅ Be sure to pay over PAYE to SARS by the 7th (if the 7th falls on a weeke… https://t.co/Vaha6OpJKg 2 weeks ago
  • Your cash flow reveals HOW, and from WHERE, you’re going to pay those monthly expenses. Get your beginner’s guide… https://t.co/RuRtdVQZa5 2 weeks ago
  • RT  @CatherineHYoung : Step 7 in our #21daybusinesschallenge - forecasting sales and revenues. Some great advice from one of the #entrepreneu… 2 weeks ago
  • RT  @ThinkroomTalk : Day 7 of 21: Did you think we were done? Not a chance. Here is more on financial forecasting. Check out these awesome ti… 2 weeks ago
  • As a business owner, personal development can also have a positive impact on your business. Here are a few top tips… https://t.co/KbOYU9equj 2 weeks ago
  • Looking for an accountant in Cape Town? Peter La Grange (NDip Cost & Management Accounting and member of SAIPA) has… https://t.co/Wg1J4FKmL2 2 weeks ago

Subscribe to our mailing list

* indicates required
 In News

Hand pointing at a Entrepreneur word illustration on blue background.

Essentially there are only three things that every entrepreneur ought to know:

Who owes me money?

To whom do I owe money?

How much money do I have in the bank?

So you’re thinking: “Wow that sounds really simple, what do I need to do in order to get to grips with those three things?” Well let’s run through the three statements as see what’s required?

Who owes me money?

During the course of each month you will be issuing your clients invoices for the products your business sells or the services your business renders. A simply calculation of the amounts invoiced against the amounts already received will let you know what is still outstanding.

In accounting terms these clients are referred to as Debtors

To whom do I owe money?

As above, besides the monthly rent and salary costs, etc., during the course of each month your business will be invoiced for the services and products it consumes. Again a simple calculation of the invoices received less those already paid will let you know what you still owe.

In accounting terms these suppliers are referred to as Creditors

How much money do I have in the bank?

Well this is the simplest of the lot – just log in to your account each day and check your daily balance.

Once you have your finger on the pulse of these three items, you have the ability to calculate your businesses cash flow requirements. Understanding your business cash flow requirements is the key to business survival. Once you understand your cash flow requirements you can then confidently claim to understand your business.

Cash flow – why do I need to understand it?

Over the course of a few months you will soon discover that not all your debtors are as honourable as you initially thought and very soon you might have several clients owing your business money. Keeping track of who owes you money and for how long it has been outstanding is very important. In accounting terms this is referred to as a debtor’s age analysis.

Now, your clients inability to settle their invoices (whether intentional or not), will soon put you in a position where you are unable to pay your creditors when their invoices become due. Keeping track of who you owe money to and for how long it has been outstanding is very important. In accounting terms this is referred to as a creditor’s age analysis.

So as you can see, knowing who owes you money (and when it’s due) allows you to pay who you owe money (when it’s due) from the money you have in the bank. This in a nutshell is the essence of cash flow.

Now you’re probably wondering how does knowing these three things allow me to put a system in place to manage all these registrations to keep my business compliant.

Well all you need to do from here is provide this information to your accountant every month and they will have all the information they need to ensure your business complies with all the necessary regulations.

Next month we will demystify your business Income Statement and Balance Sheet and NO!, you don’t need to be an accountant to understand it.

Recommended Posts

Leave a Comment

Start typing and press Enter to search

Small Business Tax Breaks for 2015 South AfricaHow to choose a Business Entity as a entrepreneur