Author: Jennifer Brazer

The business’s definition of cash flow management can be summarized as the process of monitoring, analyzing, and optimizing the net amount of cash receipts minus cash expenses. Net cash flow is an essential measure of financial health for any business.

Effective cash flow management is one of the primary keys to success for every operating business worldwide. Efficient cash management enables business personalities and entrepreneurs to utilize the incoming and outgoing cash flow to the maximum benefit to be used to develop the company itself. Below are vital tips that will allow you to manage the cash flow of your business, no matter how large or small your business is, regardless of the industry.

Do Not Enable Your Clients to Set the Terms of Payment

If you allow your clients to manage their installment terms, it could be a question of time before their cash flow management issues become yours. Set strict installment terms, regardless of whether it implies losing a customer, notably where credit is being expanded. Incorporate particular periods for paying the money owed, late installment penalties, and conditions that may trigger legitimate activities into your installment terms. Great clients will respect your terms and leave a positive impression.

The most vital thing about payment terms is that your clients are clear about them and that you get them in writing. Gone are the days when you could make a verbal contract, and everyone involved would comply with it as though it were written.

Computerize your Charging Procedures

If it takes over a day to get a receipt into the hands of a client, you are squandering good time and assets. Considering you may have to wait up to 60 days for an installment (with net 30-day installment terms), you can’t stand to package your solicitations and send them physically once every week or once per month. Utilizing a mechanized charging procedure will decrease staff costs and quicken the change of receivables into money.

Computerize your Accumulations

For private companies, accumulations can overpower their assets and put an open pleat on their income. Computerize your receivables framework to give a daily report of the bookkeeping records arranged by age and sum owed. This won’t just empower you to predict potential income issues. It will enable your accountant or bookkeeper to center around remarkable records arranged by need. 

 Acknowledge Electronic Installments

With the accessibility of moderate electronic installment forms through a bank, such as credit cards and Electronic Funds Transfers, there is no motivation behind why a business can’t quicken its money receipts while limiting buoy. Advanced installment alternatives cannot just streamline the receivables procedure; they can likewise give more noteworthy insurance against extortion.

Put Your Money to Work

In the computerized millennial age, money does not provide any benefit without moving. Organizations collected their overabundance of money and raced to the bank to deposit in the past. Today, your money can move from your business financial records to an interest-bearing record every night.

These robotized “clear” frameworks decide how much surplus money can be cleared, leaving what’s required for the following day’s installments. Getting your abundance of money to work can add several dollars to your monthly income.

Conclusion

According to a study by Jessie Hagen of U.S. Bank, 82% of businesses fail because of poor cash flow management. If your business constantly spends more than it earns, you have a cash flow problem.

The most important aspect of cash flow management is avoiding extended cash shortages for small businesses caused by an overly large gap between cash inflows and outflows. You won’t be able to stay in business if you can’t pay your bills for an extended period.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

Real estate is one of those businesses that can help you build wealth fast. It can make you a millionaire in no time and can also account for big losses. The constant rise in property prices and market values is the real beauty of this industry. However, learning the art of the game is important for a successful career because making projections through evaluating bookkeeping and financial records is no easy feat. Investors who have the potential to read the market well can expect to have a long and healthy career in the real estate industry.

Real estate has a lot to offer to stakeholders. Everyone claims their share, from investors (individuals or banks) to middlemen (real estate agents) to clients. However, most investors are the ones who earn the most because of their capital investment and financial risks.

A Brief Account of a HUD Statement

In a real estate business, investors need to abide by the rules and regulations the government sets. Proper paperwork is of extreme importance when applying for loans to purchase and refinance in real estate. Not every real estate investor can finance everything with their own money. Most investors need help from banks for capital financing. The Department of Housing and Urban Development (HUD) is a US government-owned agency primarily supporting community development and home ownership.

What is a HUD Statement?

According to studies, investors who manage and maintain their business books and statements earn more from high markups on real estate investments. Most investors involve banks in the acquisition of loans for purchasing or refinancing. The HUD is one such statement that gives a complete synopsis of the settlement of funds at the end of a transaction. The services and fees are charged by the lender or broker to the borrower when applying for a loan in real estate. It includes the type of loan, a summary of the borrower’s and seller’s transactions, settlement charges, loan terms and conditions, and other similar sub-requirements.

Recording a HUD Statement

When recording a HUD statement in a real estate business, you must be very careful in filing the detailed form. Any discrepancies found in the form will lead to a rejection of loans or credits. Since the statement shows a detailed itemization of all costs about or referring to the real estate sale and mortgage loan transaction, it is recommended to hire the expertise of professionals for the ideal recording of the statement. The closing agent can close the statement or treat the borrower’s and the lender’s transactions individually.

Breakdown of a HUD Statement

Closing agents have experience dealing with HUD and sale and mortgage loan statements. Therefore, they know each section’s meaning and how it must be filled out appropriately. However, if you are doing it yourself, know that buyers are referred to as borrowers and lenders as sellers. It consists of 3 pages and a signature page composed of many figures! It may also include a supplement.

Page 1: Shows the summary of the borrower and seller’s transaction.

Page 2: Shows details of the associated fees involved with the settlement, such as broker fees, loan fees, title charges, additional settlement charges, government recording and transfer charges, deposits reserved with the lender, and more.

Page 3: Features figures related to the Good Faith Estimate (GFE) and breakdown of terms of loans.

Conclusion

In conclusion, real estate offers immense wealth potential but demands meticulous financial management. Understanding HUD statements is crucial for successful transactions, requiring precision and possibly professional assistance. Mastery of this aspect enhances investors’ profitability and ensures smoother real estate dealings, contributing to long-term success in the industry.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

Business Funding and financing is the course through which entrepreneurs arrange money for investment for business purposes. An investment can be used to start a new business or finance current activity in a business already well on its way.  

There are Three Primary Purposes of Financing

• Funding a business startup
• Financing for the growth and expansion of a business
• Dealing with unforeseen financial encounters

Sources of Business Financing

• Self-Funding
• Giving up Equity
• Debt
• Business credit card use
• Small Business Administration loans
• Foreign investors
• Crowdfunding /Selling shares of the business

Are Business Funding Rules Good or Bad?

If you ever turn to economics, accounting, or managing the books in a business, there will probably be rules everywhere. Following rules in business are suitable for running a successful and growing company.

However, experience, seasonal forecasting, and judgment matter in running a successful business and producing result-oriented business operations.

If you ask a successful entrepreneur if he is a strict rule follower, the answer will be no. From a study conducted over 30 years and 12,686 Americans sample size, “Study finds successful entrepreneurs have brains and a history of risky behavior in their teens.”

7 Business Funding ‘Rules’ to Break

1. Think out of the shell. Be rebellious. Being rebellious in business does not mean risking conflict in legal matters. It means to think out of the box. If the market is going down and the overall economy is falling, there is nothing wrong with taking risks and facing challenges. But be prepared and get ready before falling into any new challenge. Introducing a product with better taste, as demanded by customers in the previous survey, can be risky. Still, those who do not try new ventures do not get new experiences and better outcomes.
2. Be risky in business. If your current growth rate is not up to the mark, there is no harm in being risky and going over new horizons in business. Those who do not take risks do not reach the skies. Large corporations often start with the least capital investment and a small-sized business. Invest money in new ventures and put your efforts in fully. Even if the business goes into recession, it might rise again after using effective strategies.
3. It is a wrong assumption if you think your previous business history must be spotless in financial bookkeeping. Investors are often not interested in previous failures, but they are interested in your new ideas and new business plans.
4. It is not true that 100% of online lenders are spams or scams. Though many can be, not all are. There are registered tools to find and meet online lenders. Look for reasonable interest rates and determine when the loan must be paid back.
5. It would help if you always had a confirmed and high-profit-yielding business plan to meet lenders. This is, again, a wrong assumption. It can be true from some lenders’ point of view. But many are just available to lend money and receive it back with some interest.
6. Do not go for too much of a loan to show you need considerable investment capital for the business. This is not the right thing to do. Lenders often have no concern with how large your business is. They are lending money to get more.
7. Fail harder. No one in the world has ever failed in their lifetime. Never fear failure. You fall, and you rise again. That is the real success.

Conclusion

We are taught thousands of rules during our coursework when studying business and financing. Accounting consultants and economists always explain the rules to run a successful business with an upsurge in growth.

However, how to fund your business is not always by a perfectly rule-abiding procedure. Use skills, be risky, gather experience from the past, and take challenges to ensure successful business funding and growth. Sometimes, breaking the business funding rules ensures better entrepreneurship than sticking to the rules that books tell.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

Payroll is a critical issue for a company and business. If the business runs short on funds, the payroll finances must be arranged to pay its employees. Small business owners can contract with payroll companies to ease their administrative work, or certain expenses can also be delayed to make for wiggle room in payroll. Train your staff on how to process payroll in time. If the system is still not working after reviewing your payroll schedule, the business likely has a significant cash flow problem.

Solutions for Cash Flow and Payroll Problems 

Small business owners can make payroll on time and manage their cash flow problems by implementing these cash-elevating policies.

Short-Term Business Loans

To fulfill an urgent requirement of payroll funding, you can borrow money or take small loans to fund the payroll. If the amount is small, the money can be paid back using small business lines of credit.

Collect Late Payments and Outstanding Receivables

Many customers delay their payments. If you run short on income in a small business, quickly generate invoices and send them to customers immediately. This will minimize the delayed payments by the customers to some extent.

Offer them discounts if the payment is made within a given time frame before the deadline.

Factor Your Invoices

• Always encourage your clients to pay quickly
• Use Invoice Factoring for typical slow-paying customers
• Be Persistent with Notices
• Retain Legal Counsel
• Link with other small business owners in the trade union
• Utilize the services of a collection agency

Decrease Business Expenses

Keep a strict check and balance on the expenses going on in your business. Do not sign any reimbursement application before double-checking the purpose, date, and invoice number.

Eradicate unnecessary expenses in your business. If your advertising costs you an arm and a leg, consider using social media, which is usually free, and directly interact with your potential customers.

Liquidate High-Value Assets

Liquidating high-value assets can be done as a last resort, but it still provides an option for making payroll in time. You can sell a valuable asset of your business that is not being used or is not a part of the capital investment. You can sell a car to manage payroll funding on time. Though this loss cannot be compensated, as you most likely do not get the asset back, it will eradicate the chances of inconvenience between you and your employees.

Small Business Line of Credit

The small business line of credit works like a credit card. You simply pay interest on your present due balance, not on the entire credit line stretched out before you. When you pay back your balance, the sum of the existing credit rises and becomes accessible to borrow again in the future.

Outsourcing Contractors

Small business owners have to manage a lot of business operations. Especially at the start of business, many small business owners hire more staff than is required. Extra payroll funding hurts small business income and growth. 

Small businesses frequently make the mistake of hiring a new employee for each new task instead of dividing it among existing staff. This creates a huge issue of payroll funding for the staff if the business runs slow.

Work on other options before hiring another team member, like outsourcing contractors. Find automated ways for various tasks to reduce the burden on your team.

Refinance & Consolidate

Debts in a small business often result in cash flow problems. Small business owners can refinance their business by consolidating the debt they have taken. They will have to pay back the debts every month and are given the relaxation of years to pay back a small amount every month. Consolidating can also save time and money currently spent managing a complicated cash flow process.

Conclusion

Small business owners can use many strategies to sort out their cash flow problems. You can reduce expenses, encourage your clients to pay on time or consolidate your debts. In the best interest of your business, consider the above tactics to manage your cash flow problems. 

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

It proves good for business when company players strike a pact to cooperate on a single mission, exchange technical proficiency, or advance their beneficial mutual interests. However, governing organizations appreciate it even more when marketable bookkeeping alliances foster limpidity, compliance, and accountability — fostering economic activity and financial statement consolidation.

Accounting Statements

A company must print four financial data summaries at the end of a period: month, quarter, or financial year. These comprise a statement of financial situation, a declaration of profit and loss, a report of cash flows, and a statement of shareholder equity changes.

Review a company’s financial statements — especially its statement of profit and loss, year after year. You can see whether the industry has compensated for its operating transgressions and moved on from a profitability standpoint. A quick way to gauge that is going through its P&L and noting profit trends over the years.

Consolidation

Consolidating accounting statements means adding performance report data for two or more productions, depending on equity stakes and applicable guidelines. Think of it as totaling each financial item and ensuring the final bookkeeping result corresponds to the underlying percentage ownership — the other name for an equity stake.

When a company owns less than 20% of another entity’s equity, it uses the cost method — under which the investment value doesn’t fluctuate unless the affiliate files for bankruptcy or copes with insolvency. If the investment business has a 20% to 50% stake, it uses the equity method.

Consolidated Accounting Statements

These declarations help appraise the financial position and results of an entire group of commonly-owned businesses. Otherwise, reviewing the results of individual companies in the group does not indicate the group’s financial bookkeeping health.

The critical entities used in the construction of consolidated statements are:

• A group is a parent entity and all of its divisions.

A subsidiary is an entity that a parent company controls.

Therefore, consolidated financial statements are the collective financial for a parent company and its subsidiaries. It is also possible to have consolidated financial statements for a portion of a group of companies, such as a subsidiary and those other entities owned by the subsidiary.

These statements require substantial effort to construct since they must exclude the impact of any transactions between the entities being reported on. So, if there is a sale of goods between the subsidiaries of a parent company, this inter-company sale must be eliminated from the consolidated financial statements.

Another common inter-company elimination is when the parent company pays interest income to the subsidiaries whose cash it uses to make investments; this interest income must be eliminated from the consolidated financial statements.

Consolidated Accounting Statements with QuickBooks

If your business has numerous divisions or wholly-owned subsidiaries, consolidating accounting statements from all of them gives you a complete picture of the parent company’s financial health. You can use QuickBooks to amalgamate statements, but it involves careful bookkeeping. Under some conditions, you’ll need an exaltation or use of third-party software to import the financial data into QuickBooks.

QuickBooks lets you categorize transactions by class, giving the user great flexibility in defining a class. If your business has several divisions but is still a single legal entity, elect a class to report profit and loss by division. However, be sure to identify each operation by its class to keep the reports accurate. Beginning with QuickBooks, you can produce a new balance sheet report by class, displaying assets, equity, and liability and a consolidated balance sheet for the company.

Final Note

With QuickBooks, small businesses can reduce monthly costs while optimizing productivity. The key benefits are eliminating many expenses and connecting to financial institutions for free instead of paying a monthly fee. It can also provide access to more users, store data for free, and include many more benefits.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

Have you noticed how much E-commerce has revolutionized the business industry lately? It’s incredible how convenient online shopping has become. We cannot only compare prices from different stores but also have access to unique products that we might not find in our local stores. But let’s not forget the importance of security when purchasing online. This is where payment gateways come in – they make the process safe and secure so we can shop with peace of mind.

What Is a Payment Gateway?

AI payment gateway is a service that processes credit and debit card transactions for e-commerce websites. It is software that securely transmits payment information from the customer to the merchant’s bank for authorization and settlement. Payment gateways act as the middleman between the customer’s and merchant’s banks, ensuring that the funds are transferred securely and quickly.

How Do Payment Gateways Work?

Customers who place an order on an e-commerce site are directed to the payment gateway to enter their payment information. The payment gateway then encrypts the data and sends it to the payment processor for authorization. The payment processor then sends the information to the card association (Visa, Mastercard, etc.) to verify that the customer has enough funds and that the transaction is not fraudulent. If the transaction is approved, the payment processor returns a confirmation to the payment gateway, which then sends the confirmation to the e-commerce site. The entire process takes a few seconds, and if the transaction is declined, the customer is notified immediately.

Why Are Payment Gateways Important for E-commerce?

Payment gateways are essential for e-commerce because they provide a secure and convenient way for customers to purchase online. Without payment gateways, customers would have to provide their payment information directly to the merchant, which could be risky. Payment gateways use encryption and other security measures to protect customer’s sensitive data, ensuring that hackers cannot intercept it.

In addition, payment gateways make it easier for merchants to accept various payment methods. Customers can pay with credit and debit cards and alternative payment methods like PayPal, Apple Pay, and Google Pay. By accepting multiple payment methods, merchants can cater to a broader range of customers and increase their sales.

What Should You Look for in a Payment Gateway?

Several factors must be considered when choosing a payment gateway for your e-commerce site. First, you should look for a payment gateway compatible with your e-commerce platform. Some payment gateways are explicitly designed for specific platforms, so choose one that works with your site.

You should also consider the fees associated with the payment gateway. Most payment gateways charge a per-transaction fee as well as a monthly fee. Make sure you understand the fee structure before choosing a payment gateway.

Finally, it would help if you looked for a payment gateway with excellent customer support. If you run into any issues with the gateway, you want to be able to get help quickly and easily.

Conclusion

Payment gateways are essential to this realm, providing customers with a secure and efficient way to purchase online. With various payment methods available, merchants can easily cater to diverse customers. When choosing a payment gateway, compatibility, fees, and customer support are essential. By selecting the perfect payment gateway, you can have peace of mind knowing that your e-commerce site is safeguarded, secure, and profitable. Get ready to embark on a successful journey in the world of e-commerce with the right payment gateway!

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

Are you going to start a business? Do you already know how much money you want to earn? This is one of the first aspects that you have to consider. To do this, you must familiarize yourself with the net profit margin concept, which is essential in bookkeeping.

Net Profit Margin

The net profit margin of a product is the difference between the sale price to the final consumer (without value-added tax) and the costs of production or purchase of the said product. According to this, the formula to calculate the net profit margin is:

Net profit margin = (Retail price without value added tax) – (Production or purchase costs)

Furthermore, it is examined that the net profit margin is similar to but different from the “percentage of profit” term by dividing the net profit of the sale into the cost of goods to help examine the sum of profit on the sale of the goods of a company, not the profit of the company. Rarely do the individual figures of a company (such as income or expenses) mean much about the profitability of a company, and looking at a company’s earnings often does not tell the full story. An increase in profit is a good indication, but it does not mean the company is improving its overall profit margins. 

For example, let’s say that Firm A’s revenue in a year is $2 million with accumulated spending of $ 650,000. This will provide a net profit margin of 67.5% ($2M – $0.65M / $2M = 1.35M / $2M = 0.675 = 67.5%). However, suppose that the revenue of the company increased next year to $2.25 million while spending increased to $2.12 million; then the net profit margin would be 11.11% (2.25M – $2M = 0.25M / $2.25M = 0.11 = 11.11%). Despite the increase in revenue, Firm A’s net profit margin decreased as expenses increased more quickly than income.

Likewise, increasing or decreasing a company’s spending does not indicate improving or worsening its net profit margin. Assume that Firm B has revenue and expense of $2 million and $1.5 million, respectively, in one year, with a net profit margin of 25%. However, the following year, the firm restructured by lowering its total revenue and expenditure by lifting a product line. If the second-year income and expenses of Firm B are $1.5 million and $1.2 million, respectively, the net profit margin is now 20%. Thus, Firm B has significantly lowered its costs, but its net profit margin has fallen because revenue falls faster than spending.

Net Profit Margin Limitations

The net profit margin carries some concomitant limitations. Although, it is a useful and popular rate. Like any financial indicator or rate, it is useful to assess a company’s profitability. However, the net profit margin can effectively compare a company’s performance within the same industry with business models. Several companies in the sector tend to have different business models and sources of income so that they can have very different net earnings.

This can lead to comparisons which generally do not make sense. For instance, while maintaining a high profit, a company that sells luxury products can have a high percentage of profits, along with a low supply and a relatively low load. On the other hand, the stapler can have a lower snow level, a larger stock, and a greater load because of the need to increase the workload and space.

Net Profit Margin Variations

There are several changes in the net profit margin that analysts and investors utilize to determine certain aspects of a firm’s profitability. Such a variation is the net profit margin acquired by dividing the net profit by the earned income. This change has limitations, as management often has too much control over material costs. In such a scenario, the net profit margin is less effective in defining the overall quality of management.

Additionally, industries that do not have a manufacturing process have no or low sales costs. The net profit margin is effective when it comes to companies that are involved in producing certain goods. A specific variation of the net profit margin is the operating profit margin that divides the operating profit into income distributions. Traders and analysts can often use pre-tax profit margins by dividing their pre-tax earnings (revenue without deduction of tax costs) on a revenue basis.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

Budding entrepreneurs are often attracted to places that offer them better infrastructure, entrepreneurial connections, and resources. Networking events, investor meet-ups, and demo days all provide opportunities to find good advice and investment opportunities. Finding solid connections is one of the initial aims of any entrepreneur, and these valuable connections help them slowly integrate into the ecosystem of the corporate world.

Hub Culture

The idea of start-up hubs is one thing that reduces entrepreneurs’ worries by a bit. Here, you can find all sorts of resources in one place – from necessary connections to valuable information. There are a variety of hubs available depending upon the region you’re willing to operate in. There are multiple start-up communities, and one may also be able to find a virtual start-up hub.

However, a choice comes in deciding which hub will yield better results here. Virtual hubs are convenient and can be accessed by an entrepreneur from an area that doesn’t have many entrepreneurial resources. However, brick-and-mortar hubs allow entrepreneurs to meet mentors and investors in person, better grasp information, and present their ideas.

Virtual vs. Brick and Mortar

The basic idea of both kinds of hubs is the same. However, there are clear differences between the two. The number of goals you’ve already set and the guidance you need can be the major factors in choosing between the two. Suppose you are clear with your business plan and have very specific requirements (for example, requiring a professional for accounting tasks such as bookkeeping). In that case, you may just be able to go to an online or virtual hub to get a contract to help you fulfill that particular requirement. However, if an entrepreneur needs more guidance, going to a brick-and-mortar hub is recommended to get quick information from experienced entrepreneurs quickly.

The two main reasons for entrepreneurs to opt for a virtual hub are:

1. Obstacles like geographic location that hinder access to a brick-and-mortar hub
2. The entrepreneur has a late-stage, well-settled start-up and seeks contacts to help start operations or grow.

A brick-and-mortar hub has its benefits. Interacting with investors and mentors in person can achieve a lot. Moreover, a physical hub allows the entrepreneur to join a community. Knowledge sharing can help grasp a better understanding of the entrepreneurial world.

Both types of hubs have the same aim, which is to help budding entrepreneurs. Many entrepreneurs believe the kind of hub they choose doesn’t make a difference. Most believe their location is the only significant factor in choosing between the two. Most entrepreneurs say that if they are in a big city with many resources, they’d prefer to go to a physical hub. Meanwhile, if they are in a remote location far from a big city, a virtual hub would be where they’d access the needed resources.

Some entrepreneurs emphasize that both kinds of hubs have a different impact on the start-up’s geographical location. Meanwhile, other entrepreneurs believe both hubs are essential and that utilizing both is necessary for success in different start-up stages. They also believe that to build a solid company, the entrepreneur must attend a brick-and-mortar hub for guidance and mentorship while using a virtual hub’s services for contacts necessary to achieve goals.

Conclusion

In conclusion, the decision between virtual and physical start-up hubs hinges on various factors, including geographic location, stage of business development, and specific entrepreneurial needs. While virtual hubs offer convenience and accessibility, brick-and-mortar hubs provide invaluable opportunities for face-to-face interactions with mentors and investors.

Ultimately, leveraging both types of hubs can be beneficial, as each offers unique advantages in fostering entrepreneurial growth and success. Regardless of the choice, the overarching goal remains to provide budding entrepreneurs with the support, resources, and connections needed to thrive in the competitive business world.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

In the bustling world of small and medium-sized enterprises (SMEs), where dreams are built and ambitions soar, there lies an elemental force, often understated yet undeniably pivotal to their success: liquidity. Picture liquidity as the lifeblood of SMEs, a vital fluid coursing through their financial veins, empowering them to thrive, innovate, and conquer adversities. This fun, engaging dive into the significance of liquidity will not only enlighten but also entertain and inform, peppering facts and statistics to solidify the argument that liquidity, indeed, is the cornerstone of SME triumph.

Imagine an SME as a sleek, high-performance vehicle. Liquidity represents the fuel in this analogy. Without enough fuel, no matter how advanced or potent the engine might be, the vehicle won’t go far. SMEs operate in a similar fashion. They could have groundbreaking products, stellar services, or a revolutionary business model, but without sufficient liquidity, sustaining operations, let alone scaling, becomes a Herculean task.

So, what exactly is liquidity? In the simplest terms, liquidity describes the ease with which assets can be converted into cash without significantly affecting their value. For SMEs, this translates to having enough cash on hand to meet short-term obligations — from paying suppliers and employees to keeping the lights on.

Why, then, is liquidity hailed as the key to SME success? Here are a few compelling reasons:

Smoothing Out Cash Flow Volatility

SMEs are often subject to the whims of market fluctuations, seasonal demands, or client payment schedules, leading to periods of cash flow volatility. High liquidity ensures businesses can weather these fluctuations without resorting to drastic measures like layoffs or operational cutbacks.

Enabling Quick Decision-Making

With ample liquidity, SMEs can make quick decisions, seize growth opportunities, or pivot strategies without being hamstrung by financial constraints. This agility is a significant competitive advantage in today’s fast-paced business environment.

Enhancing Creditworthiness

Lenders and investors scrutinize an SME’s liquidity closely, as it indicates the business’s health and its ability to meet short-term liabilities. A solid liquidity position facilitates easier access to finance and often secures more favorable terms.

Buffering Against Unforeseen Challenges

The COVID-19 pandemic underscored the importance of having a financial buffer. SMEs with robust liquidity could more effectively navigate the crisis, adapting to changes and even innovating amidst adversity.

Now, let’s sprinkle some facts and statistics to highlight the indispensability of liquidity for SMEs further:

• According to a survey by JPMorgan Chase, the median SME holds a cash buffer large enough to support 27 days of their typical outflows. This startling statistic underscores many SMEs’ precarious financial balancing act and the critical need for adequate liquidity planning.
• A report by the Federal Reserve found that 85% of SMEs experienced financial challenges in the recent year, with the most common being securing funds for operating expenses. This indicates a widespread struggle with maintaining liquidity.

On a positive note, SMEs that prioritize liquidity management tend to outperform their peers. A study by U.S. Bank noted that 82% of business failures could be attributed to poor cash flow management, highlighting the direct correlation between liquidity and business viability.

In practice, how can SMEs boost their liquidity? Here are some practical strategies:

Efficient inventory management

By balancing just the right amount of inventory, SMEs can reduce holding costs and free up cash, enhancing liquidity.

Stringent credit control

Implementing strict credit terms and diligently following up on receivables can accelerate cash inflows, improving cash positions.

Exploring diverse financing options

Beyond traditional loans, SMEs can explore lines of credit, invoice financing, or even equity financing to bolster their liquidity.

Prudent cash flow forecasting

Regularly forecasting cash flows helps anticipate and plan for periods of cash tightness, allowing SMEs to make informed decisions about spending and investment.

In conclusion, liquidity isn’t just a financial metric to monitor; it’s a strategic asset that empowers SMEs to navigate the ebbs and flows of business with confidence and agility. By understanding and actively managing their liquidity, SMEs can unlock their full potential, driving growth, innovation, and resilience in the face of challenges. So, let’s toast to liquidity — the unsung hero of SME success, ensuring that the entrepreneurial spirit not only endures but flourishes.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

What is Personal Budgeting?

Budgeting is essential not only for businesses but also for an individual’s personal life. Personal budgeting is a method of monitoring and controlling your finances. It helps in monitoring personal finances and managing them accordingly. At times, we are so far from having a budget that we end up broke within a week of being paid.

This not only leaves you stressed out, but it even affects your professional life. You feel like you are not paid enough, or there is no use in getting paid, as you eventually end up with nothing within a week. While working and being broke, an individual’s mindset can be drastically impacted. Hence, a person needs to monitor their financial spending, analyze the problematic areas, and design a budget to improve their financial position.

Assess your Current Financial Position

It becomes frustrating when you know that you are working on a low salary and your expenses carry the weight of a mountain. Low-income budgeting seems hard at an initial level. However, you will figure out your budget plan more effectively if you start small. 

Categorize Your Expenses

The first and best way to budget is to monitor your current lifestyle. Observe your spending habits and monitor your current financial position. Before making any budget quota, list your expenses in the following categories.

Debt

Your long-term expenses include student loans, car loans, unpaid bills, credit card balances, etc. Writing them down will give you a shockingly realistic yet clear picture. Don’t worry. However, they are not impossible. 

Monthly Bills that are Fixed Expenses

Monthly bills are something that you cannot avoid. They are things that you have to pay for. However, listing them gives you a clear snapshot, and you can even reduce them to a limited extent. These expenses include rent, utility bills, cell phone plans, gas, and food.

All the Variable Expenses that You Can Balance

Variable expenses are all leisure or emergency expenses that do not occur every month, such as buying new clothes, dining out, buying new gadgets, getting your car fixed, and other fixtures and expenses at your residence. You cannot simply eliminate all of these expenses. However, you can manage a few of them and see which expenses are repeated often.

Identify Your Problem Spending Areas

When you are done listing all expenses, you will be better able to pick out the problematic areas straying you away from your budget every month. This problem could even highlight the areas that need your immediate attention. For example, if your car asks for monthly monetary attention, you need to get it fixed properly once and for all before it breaks down completely.

Making a Budget

Designing a budget is not difficult unless you don’t manage your steps carefully. It is essential to design it step by step as it will help you design a practical and applicable budget for your expenses. 

Step 1: List all your liabilities and plan your gradual repayment method. Once you have listed your liabilities, you must design your payback method. You should not overburden yourself by paying all of your liabilities together. Although, going for a crash repayment will leave you dissatisfied, and you could add more loads.

Step 2: List all of your necessary expenses.

Step 3: Prioritize your money goals.

Step 4: Cut your unnecessary expenses. Now, this is the most challenging part of it all. You might feel it is practically impossible to cut down as every bill you pay is a basic necessity. However, once you have crossed the monitoring and budgeting steps, you can figure out the failure in your current spending methods.

Step 5: Be Frugal.

Tips to Create a Budget and Save Money without Going Broke

• Be realistic in setting financial goals.
• Record every transaction meticulously.
• Prioritize bookkeeping to track expenses.
• Exercise control over your spending habits.
• Balance frugality with enjoyment; don’t eliminate all recreational activities.
• Seize upcoming opportunities for savings or additional income.
• Continuously update your budget, reallocating freed-up funds towards other financial goals.
• Maintain emergency funds for unexpected expenses.
• Allocate remaining cash based on percentages to ensure balanced spending and saving.

What are the Budgeting Benefits?

Budgeting offers numerous benefits:

1. It allows you to concentrate on your financial objectives.
2. It fosters financial stability and organization over time. With a budget in place, you gain better control over your finances, enabling you to manage expenses more effectively.
3. Budgeting ensures you have surplus funds for emergencies and provides a clear overview of your finances.

Overall, it also helps identify and rectify poor spending habits, leading to financial improvement.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.