As a business owner, it is crucial to understand cash flow and how it can affect your business and your profit.
We implore you to work with a qualified virtual Chief Financial Officer (vCFO) who can help you determine what practical steps should be taken to reach your business goal. In the world of business finances, a cash flow report can make or break a business, and is one of the reasons your vCFO will be an indispensable part of your team.
Determining the Quality of Your Cash Flow
Cash flow can be either positive or negative.
When your business account is receiving more cash than it is paying out, you will have a positive cash flow result. This usually means that your company is receiving more money in sales of products or services than it is spending on business expenses or anything else, which results in a good, positive cash flow. The remaining money after business expenses is your profit.
However, if expenses for payroll, maintenance, rent, and other services are exceeding the flow of money being made, you will start losing money, resulting in negative cash flow.
How Does Your Cash Flow Affect Your Decision Making?
Positive cash flow is the foundation of a solid business. Positive cash flow can pay for expansions in operational capability and help you to recognize when targeted profit goals are within reach.
However, negative cash flows can also be a necessary part of life for every business, especially during start-up and periods of rapid expansion. Cash flow reporting during these times will help you determine if your business finances will remain strong enough to last until the expected revenue increases finally appear and bring your cash flow back into the positive.
Your cash flow ultimately determines if you have the means to expand, maintain, or upgrade your business.
Planning for Future Growth
Cash Flow Report is an important tool for your vCFO’s; it can be used to determine which investments have the best chance of resulting in future revenue gains without putting the business at risk of bankruptcy.
Your virtual CFO will be an architect designing the profitable business you have always envisioned.
Hiring a vCFO Can Assist in Succeeding in Your Business Plan
The Virtual Chief Financial Officers at Gonzalez and Arrambide, Inc. in Weslaco can help you maintain a profitable cash flow for your business. We strongly suggest learning about cash flow and how it affects your business.
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To run a successful business, you must have a solid cash flow.
Understanding cash flow is key to prospering as a business owner. A virtual Chief Financial Officer (vCFO) can help you develop your business and triumph. Your vCFO will use several tools and strategies at their disposal, including cash flow reports, amongst other data sources, to create a strategic plan that helps grow your business.
The vCFOs at Gonzalez and Arrambide, Inc., can inform you about the financial information you need to make critical business decisions.
What Is a Cash Flow Report?
In short, cash flow is how much money is coming into your business and how much is going out. A cash flow report will summarize how your business is doing in this regard.
For example, more money coming in than going out will give a positive monthly cash flow result. If this monthly trend continues, you can expect to profit. It is possible to have a good cash flow result at the end of the year even if you were negative some months.
It’s worth noting, however, that a cash flow report isn’t the same as an income report.
Who Creates a Cash Flow Report?
This report falls under the responsibility of a vCFO since it is per finances. While your accountant creates the income report to help you determine how much tax to pay, your vCFO will create a cash flow report to assist in determining when you are ready to grow your business and increase your future profits.
How Is a Cash Flow Report Used?
A cash flow report is useful for predicting future account balances. These forecasts are what allow strategic plans to be made. Your cash flow report will tell you when your business can operate with the extra costs that come with expanding without breaking the bank.
By timing your growth correctly, your business will experience increased revenue with minimal risk.
Outsourcing to a Virtual CFO Can Improve Your Business’ Cash Flow
Owning a business can be extremely overwhelming and stressful, but by hiring a virtual Chief Financial Officer in Weslaco, you will be assisted with the financial services your business may need. By reaching out to Gonzalez and Arrambide, Inc., you’ll get the guidance you need to start or grow your business.
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It’s hard to imagine that a small business does not qualify for some or all of the employee retention credit (ERC).
And remember, this is a tax credit—one of the very best things that tax law has to offer. True, it’s not as valuable as some other tax credits because you have to reduce your payroll income tax deductions for the credits, but the ERC certainly puts you ahead.
And you can be looking at big bucks. The possible ERC is $5,000 per employee for 2020 and $28,000 per employee for 2021. That’s $33,000 per employee!
For 2020, You Have Two Ways to Qualify:
- You had a gross receipts drop during a 2020 calendar quarter of more than 50 percent when compared to the same calendar quarter of 2019. The more than 50 percent test is the trigger for the ERC, and you automatically qualify for that quarter and the following 2020 quarter.
- You suffered from a federal, state, or local government order that fully or partially suspended your operations (under this rule, you qualify for the ERC on the days you suffered the full or partial suspension, even if you did not lose any money).
For 2021, You Have Three Ways to Qualify:
- You suffered a federal, state, or local government order that fully or partially suspended your operations (under this rule, you qualify for the ERC on the days you suffered the full or partial suspension, even if you did not lose any money).
- Your gross receipts for a 2021 calendar quarter are less than 80 percent of gross receipts from the same quarter in the calendar year 2019.
- As an alternative to number 2 above, using the preceding quarter to your 2021 calendar quarter, your gross receipts are less than the comparable quarter in 2019.
One final note. You may not double-dip. Wages you use for the ERC may not be used for the Paycheck Protection Program (PPP), family leave credit, or similar COVID-19 programs.
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No matter if you run a startup company or are a veteran to running a business, making sure your cash flow is distributed efficiently is key to your business operations. Let’s face it, business owners have a lot to manage on the daily, and drafting financial strategies and conducting standard bookkeeping can take a lot out of your day.
If that alone wasn’t enough to consider hiring a virtual chief financial officer (vCFO), the experienced vCFOs of Gonzalez & Arrambide can also help your business in the following ways.
1. Customized Goal Setting
The first thing a quality vCFO will do for your business is to fully understand and layout your business’ short and long-term goals. These goals will become the blueprint from which to build your custom strategy.
You get customized experience to your needs and goals. This cuts any expenses on services you don’t require, saving you more on overhead costs.
2. Report Design and Problem Solving
Our vCFO will design and set a standard report to help organize your finances. Because we have corrected many issues and guided financial situations in different companies, we can tailor your financial strategies to achieve your goals in the most cost-effective way for you.
Their experience will help you overcome your financial woes even before they happen.
3. Technology Efficient
Our vCFO can optimize any of your financial technology. This way we will maintain the financial organization within your business and cut expenses on the software you don’t really need.
Virtual CFOs have experience with a wide range of different systems and products since they work remotely, and our vCFOs will be able to provide first-hand advice on different systems and find one suitable for your needs.
4. Experience and Custom Balance Sheet Builds
Hiring a vCFO gives you a fresh pair of eyes that have seen plenty of balance sheets before. A quality vCFO will analyze your balance sheet when we come on board, and if needed, we will rework it.
By outsourcing your CFO services with us, you’re bringing instant experience to your business. That experience could be vital, especially when it comes to a startup business.
5. Streamline Financial Processes
When you partner together with our vCFOs, you’ll only gain from their financial expertise while obtaining help with developing and streamlining your financial operations. Because our vCFO has worked with various clients, we have a broad range of insights into operational improvements across many different industries.
As your business grows, our vCFO can grow along with you. Whether you only need the Gonzalez & Arrambide vCFO services for one day a week or part-time, we are here to support you and your business at every business milestone.
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Now that you’ve started down the path of entrepreneurship, there are a series of essential roles to fill, like CEO and marketing team positions. However, many people make the mistake of leaving the financial department last in the staffing queue.
Within the financial department, the most ignored position is that of Chief Financial Officer, also known as the CFO. The lack of a CFO is the reason many enterprises don’t make it.
At Gonzalez & Arrambide, we want to showcase the importance of hiring one of our vCFOs to help your business boom.
What are the Duties of a vCFO?
The CFO is responsible for managing the financial aspects of your business. Yet, a full-time, in-person CFO can be costly. This is where hiring a virtual CFO (vCFO) could make a lot of sense for small businesses and startups.
A vCFO is a consultant or business that offers the services of a CFO but does their job remotely and usually on a part-time basis. The vCFO will focus on creating high-level financial strategies and putting them into action, such as:
- Managing and monitoring the bookkeeping
- Creating short and long-term financial goals and providing valuable feedback
- Providing competitor analysis
- Cutting out any financial waste, with growing your business efficiently in mind
- Managing your business spending
- Generating key financial metric reports
Our vCFOs at Gonzalez & Arrambide can provide financial services on a weekly, monthly, or quarterly basis. Our vCFOs are also ready to provide advice for any specific project you have in mind. However, if you already retain the services of a full-time CFO, investing in a vCFO may not be an optimal decision for your business. Keep in mind, however, that it is more fiscally advantageous to hire a vCFO over a CFO.
At the same time, if you have a new startup, hiring a vCFO is always the better decision to save on overhead costs.
Find the Weslaco Financial Services You Need at Gonzalez & Arrambide
As your business grows, a vCFO can grow with you. Get all of the skill set you need with a traditional CFO working with you at a more affordable rate. Whether you only need the Gonzalez & Arrambide vCFO services one day a week, or part-time as you become more successful, we are here to support your business at every step.
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