Business Accounting 101 – Cash Flow
ByThere are certain parts of accounting and bookkeeping that you need to be familiar with as the owner of a coaching business. Cash flow is essentially the movement of money in and out of your business. It can be determined over any convenient period of time and is a more valuable indicator of your company’s financial health than is net income.
Healthy cash flow means that you have the money needed to pay your business bills when they are due. Without available funds, the alternative for the entrepreneur is to pay those bills on credit. This points out the importance of attention to cash flow – you can have income from your coaching products and services, but still not be able to pay your bills properly. If you are not tracking your cash flow, it is simple to get into trouble without realizing it.
You will want to keep the concept of cash flow in your mind when you set up payment plans with your coaching clients. Many coaches use a system of clients paying for their coaching in advance at the beginning of the month. This helps prevent the problem of not having money to pay the phone bill because you have clients that owe you money. Be cautious of cash flow issues if you use other payment schemes with your clients.
