October, 2010 archive
What is a Cash Flow Statement? 0
A cash flow statement is a document that shows the general handling of cash in the company. This financial report does not depict profits or losses, but rather tracks the company’s flow of cash. This type of statement features complete transactions, from the opening balance to the smallest changes in the balance sheets.
This statement serves as an excellent analytical tool, making it an important asset when applying for business credit loans. A positive trend in the cash flow statement indicates that the company has the capacity to clear all its debts and other impending bills when due, thus providing an accurate status statement to both clients and the bank. This statement also enables the company owner to remain vigilant. When made public, it serves to keep investors informed about the company’s peformance.
Cash flow is generally determined by three activities:
1. Operating activities – Cash flow for activities at a corporate level, production and sales.
2. Investment activities -Cash flow if the company has made investments.
3. Financing activities- This refers to the cash/loans that the company has procured from various investors and the bank.
For the cash flow statement to be accurate, all the cash inflow and outflow has to be properly tracked. Here follow two ways to prepare the statement:
- The direct method: This is the simpler method to prepare a cash flow statement, All of the cash flow activities are listed under the relevant headings, adding and subtracting as required.
- The indirect method: This method, (which is slightly more complicated), lists physical assets and cash which are calculated and tallied under different headings.
What is a Business Line of Credit? 0
A business line of credit is an important development that many banks have implemented in recent years. This concept takes the whole loaning procedure to a different level altogether. This is a scheme of sorts that make it possible to borrow some amount of money in form of credit from the bank, any time one wants. Businesses with a line of credit can borrow up to a preset limit, known as the line of credit.
The parameters that qualify a company for a business line of credit are basically the quantity and the capacity of cash flow that the company uses. This is closely monitored by the bank that will finally approve the loan. Banks look for profitable companies with a positive cash flow. No collateral is required for the same, but the company needs to maintain a good track record of repaying credit.
Credit lines are beneficial because a business needs money from time to time, and there are always certain crunches that need to be met. No one is knows when there may be a market surge, creating an immediate need for cash.
The system is more like a credit card system and hence the whole repayment system is modeled accordingly. It can be of many different formats, including overdraft protection, or demand loans. It is most easily understood as a short term loan from the back or other financial institutions.
Interest rates vary for the loans, and are almost always subject to change without prior notification. Businesses can use lines of credit to their benefit, but have to be cautious not to overindulge in the flow of extra money.
Why Would a New Business Fail? 0
Many people come up with promising new ideas for a business but are unable to keep the venture running for a long time. While some ideas are simply not good, others may have a huge potential, but even so their owners are not able to sustain the business. The following are three big reasons why a new business would fail:
Inability to Plan
Many people think that planning is a waste of time and is boring. For some, sitting and writing business projections and making financial projections is very uninteresting. Yet, it is always important to strategize what you are doing and where you are headed. It can be laborious and boring, but to have an effective plan is very important if one wishes to be successful in any business.
The Owner Wants to Make Money…Now
There is no doubt about the fact that everyone enters a business to make money. Money has the ability to make the world go round. But if money is the only goal, there is a high level of risk associated with the business. Why? Because just like plant that needs sun, water, earth, care and time to grow, the same can be said of a new business. The person who only looks at earning money is very vulnerable and he can also ignore some opportunities which come.
Too Much Emphasis on Product to the Exclusion of All Else
It undoubtedly is very important to have a good product, but it is just as important to identify the potential customers. The business and the product can only be successful if there are buyers for the product. Research the requirements of the market and that of the target audience, and then develop the product accordingly.
Make Effective Use of Workplace Communication 0
Effective communication at the workplace ensures a healthy relationship among colleagues and peers. Communication is the exchange of information through different means such as internet, telephone, signals, etc. As communication is vital to the development of a meaningful relationship, it should be ongoing and improve with the passage of time.
Workplace communication relates to co-workers, suppliers, bosses, customers and, of course, ourselves. It is important to effectively create, cultivate and expand personal and business relationships. Many people have the natural ability to communicate with others, but some need to make special efforts in this respect. Some employees find it difficult to express themselves because they are frustrated or annoyed with their peers.
Communication is the key to effective work and to good working relationships with one’s peers. Effective communication enables the employee to give and accept constructive feedback from his peers. In order to open communication channels, one should have the ability to approach one’s peers and start up an interesting conversation.
Communication at the workplace should flow naturally between one person and another and from one level to the next. Communication can be achieved verbally or in writing. The important thing is to use the appropriate method to communicate in an effective manner. Effective communication is the key to success and it can be acquired through personal initiative.