Few days ago, on this site there was an article on the important of cash in your hotel during this crisis
If you have not read it so far, I would recommend reading it so that you understand how you can collect cash.
Today I wanted to build up on that and say that cash is king in your business. I also wanted to share a tool to help you to understand your cash position on any given day.
A cash flow statement will tell you all the cash inflow and outflow from your business during a set period.
So as we are in April, you can do a cash flow statement for April.
The life blood of business
Cash is king and can solve many problems. As a business, you will need cash to pay salaries, bills and statutory dues.
Needless to say, if you do not have cash, you become bankrupt.
This statement can help you to identify what is your cash position and if you need to apply for a loan or look at other means of raising cash.
I have made a file that you can download. The file is very simple to use and has the instruction on use on the first page.
The file is password protected with the cell you need to enter details highlighted in blue. Only those cells are need to be used.
After you put in all the details, at one glance, you will be able to see the position of cash you will be left with at the end of the period.
It will also tell you, where you have a problem
How to analyse the problem?
Once you have the sheet, open the sheet and compare the figures.
Ask yourself these questions to dig into your problems
- Do I have enough sales as given by Direct collection. Is it more than the expenses
- What is my total credit outstanding and how much am I collecting this month
- Is there any way to reduce my vendor payments
- Is there any expense that I can defer.
Once you have found these answers, in case there is a shortfall, ask who can you borrow from.
Please do give your feedback about the file and if it was useful to you.
Prasanna is a Chartered Accountant and a Cost Accountant with over 20 years of experience in the hospitality and aviation industry across international markets. He is currently based in Chennai and is the CFO for a leading MNC hospitality group.