Cash Flow Scorecard 10: Have you ever missed paying yourself?

Posted 10 August by Barb Easter in Accounting, Bookkeeping, Cash Flow, Entrepreneur, Small Business, Tools and Resources, Videos

Here’s another segment of our ongoing Cash Flow Scorecard video series designed to help accountants, bookkeepers and their business clients delve into what could harm the business’ cash flow. Barb and Blaine have a sensitive discussion about paying yourself first – and how much….and what to do if you think it’s impossible right now.

Believe it or not, paying yourself starts cascading changes that have a lasting, positive impact on your cash flow health.

Download Dryrun’s free PDF Cash Flow Scorecard to use for yourself and start the discussion with your clients.

Watch all 10 videos:

Cash Flow Scorecard 1: How do you get paid?

Cash Flow Scorecard 2: How big are your individual sales?

Cash Flow Scorecard 3: How often do you get paid late?

Cash Flow Scorecard 4: How large is your monthly budget?

Cash Flow Scorecard 5: How do you pay your largest expenses?

Cash Flow Scorecard 6: How often do you pay your bills past the due date?

Cash Flow Scorecard 7: How fast are you growing?

Cash Flow Scorecard 8: How do you fund expansion?

Cash Flow Scorecard 9: How big are your savings?

Cash Flow Scorecard 10: Have you ever missed paying yourself?

Video Transcription:

This is Blaine and Barb at dryrun and today we’re going to cover another factor on our cash flow score card which is going to help you or your clients determine how at risk the business is for a cash flow crunch.

Today we’re going to cover, have you ever missed paying yourself?

Barb: You know what Blaine I am glad we are covering this one it is definitely the most personal aspect on the cashflow score card. I think it’s one that could really highlight if you or your business or your clients has a cash flow problems that you’re trying to mitigate as a last ditch effort.

So a lot of at risk situation would be if you missed paying yourself as proprietor or owner of the business. A high-risk situation would be if this is a pattern that you’re developing. So again it’s not, we can’t frame this discussion in terms of right or wrong because you know as a employer it’s important that you take care of your assets, both human and business assets that you have. At the same time one could maybe point more towards a cash flow crunch would you mind elaborating.

Blaine: Yeah for those of you out there that have had those months when you don’t pay yourself, if you’ve never had that you’re a rarity. That just happens in business and especially when you go over the cash flow scorecard you’ve got a bunch of other factors that are at high risk, you’re going to eventually run into a crunch. You can be owed a whole pile of money, be profitable and everything on paper and not have the money and just not be able to pay yourself or even worse have to throw money into the business. Virtually everyone that has run a business has had to do that at one time or another especially when you have higher risk factors affecting the business.

But when it becomes routine, it begins to be a real issue. You know I have heard that old old adage, pay yourself first. People that say, I don’t think they have run a business before because you have staff sitting there you, have rent to pay. You can’t pay yourself first, you’re going to lose staff, they will quit you’re going to start running into late fees, you’re going to maybe get kicked out of an office. Pay yourself first is a nice thing to say but in reality when you get into a cash flow crunch, we all know whose shoulders it lands on, it’s you, it’s the business owner.

If it rarely happens but it has happened before it’s not some major red flag but when It happens routinely it does indicate that you’ve got some issues likely with your cash flow.

If you are getting paid sometimes it’s likely a cash flow issue where people owe you money people and you’re having trouble getting that money into the business.

Barb Yes, thank you for just elaborating on something that’s just really personal for a lot of people. Business owners, we talk to them every day and they talk about how this is an issue that comes down to meeting payroll or paying themselves.

So I appreciate you taking the time to elaborate on that. Again it’s not the only factor that would point to risk on our scorecards. The best thing to do would be to download it free for all and use it to assess where you fall in all those factors, and then decide what your next steps are going to be to get your business or your clients business into a position of cash flow health.

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