How do I create a monthly budget for my website network when I have companies paying me net 30-90 days? How can I plan?
My company is currently making a return of a roughly $1,000 per day when I invest all my money back into traffic. We are operating at at about 330% ROI. The downside is that I am not getting paid for that $1,000 per day for months. I have anxiety attacks when the business says it only has $10k in the savings but I know that I have over $40,000 incoming.
How do I get over this hump?
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Feb 1, 2014
Taking Bernadette's suggestion one step further, prepare a detailed cash flow budget. You can get a format from my company web site www.cfrscs.com. Look for the 13 week cash flow projection. That process will force you to re-evaluate your situation every week for the next 90 days. In my experience, there is not better tool to get your arms around cash flow, but you need to be disciplined and go through the process every week. It works.
Feb 1, 2014
I would first determine your fixed monthly expenses. If possible, I would pay those expenses when due. Do you have a history of payments that you received?
You can estimate your cash infow based on prior history. I would budget the $40,000 incoming based on prior payment history. I would pay down your other expenses as your payments arrive. I would contact your vendors to see if they
would extend terms.
Feb 1, 2014
Change your terms or use the terms to calculate your cashflow and the sales you need to be closing in order to achieve your monthly projections, i.e.
if you keep those broad terms, use 90 days to then plot out and plan what revenue is needed and what income is coming in when..... i.e. in January if you closed a $1000 assume you will get it in April.... so you needed to start closing projects back in October to impact January, Nov for February, etc....etc... Then if you get paid early, you have a richer cashflow to support a future month, that may be slow.