No Cash No King

Posted by on Oct 12, 2011 in Business, Management | One Comment

It has been some time since I last posted, but for good reason. I have been building an application in Microsoft Excel that projects future cash balances. A quick google search will show that inDinero and a few other companies have software that will project cash balances for a company. However, in my opinion many of these applications fall short of an ideal solution – or else I would have started using them long ago. This prompted me to create my application.

The reason I had not used other applications is because they are a lot of work to set up. A business owner has to hand type all of the known monthly transactions. Only then can the software estimate future cash balances. The estimates are usually only on a monthly basis, not daily. If the frequency or amount of one of your regular transactions changes you need to update the software. Who runs their business on a monthly basis? Most business owners are checking in weekly if not daily. I wanted to know how much cash will I have on a specific day so I know what day I can actually invest in the company. Also, I do not have time to enter every single transaction that goes through my bank account along with its frequency. Finally, I want to know if cash is trending up or down or whether the trend changes and if it changes when. These are the problems I solved with my application.

I simply download transactions from the business account and paste it into a spreadsheet. From there a VBA macro that I wrote figures out the frequency and amount of each transaction and then estimates my daily cash activity and cash balance for every day 6 months into the future. I created an area where I can enter in the amount for investments on a specific day and see how this impacts my projected cash. There are nice charts that make it easy to see every day in the future and how much cash the company will have on hand.

I plan on making this tool available to other business owners. It will not work for everyone, but for those whom it does work, it will provide powerful information to make better decisions.

It took about a week to build the application. I believe that many business owners are faced with similar problems on a regular basis. There is a problem that can be solved for your business but it takes work and time to do so. The current solution is working, so why fix it? Not fixing it is a mistake. Solving operational problems for your business my systematizing and automating processes can provide a significant competitive advantage. The opportunity costs that can be saved are also significant. For more on this see one the great Mixergy interviews by Andrew Warner with Jas Panesar, here is the link: Jas Panesar Interview

1 Comment

  1. Caleb Allen
    December 31, 2011

    Cash is king, but it seems to time consuming to track it. So far flying by the seat of my pants has worked… not for long. I’m going to need to fix that.

    Reply

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