The financial difficulties rarely come knocking at your door; they rather just attack you like an unwelcome guest or an intruder. These difficulties, in finance, can originate because of various reasons such as unemployment, loss of job, accident or illness, addiction, retirement, a large family or entry of a newborn member in a family, retirement stage or self-independent for the first time.
Facing financial struggle
Living with the struggle will only further pull you down in a whirlpool of difficult situations that will not just restrict your normal activities but, in turn, might hamper your daily routine and result in losing on whatever savings or resources you are left out with. Better open up, face the difficulty and feel free to approach a credit counsellor or debt management programs. As the saying by Nicholas Ling goes “ignorance is a voluntary misfortune” and so is the case with financial struggle.
Problems faced by Cash flow trap and remedies for escape
Financial difficulties arise due to a condition, wherein we observe or realise a restriction or an overflow of movement of cash. For control of the cash flow, prioritize your expenses that you need to clear either on an immediate basis or holds interest on the failure of repayment or cancellation of service. Few examples for these cash expenses include:
fee payment,
bill clearance,
loan repayment
Other expenses which take place at an individual level.
For industrial and business levels
You can execute a plan for the cash expenses by the framing of ‘cash flow tabulation’ that is the amount you receive by deducting the ‘overdraft balance’ from the ‘cash in hand’. Then, you have to maintain a record of this amount on a monthly basis. Planning your cash expenses also involves budgeting the outflows. We can compare it to a swimmer who takes all the necessary precautions that would keep him/ her safe while enjoying the swimming and at the same time makes sure that no harm or the least damage is caused in case of any adversity. If not prevention, it does help to dodge any major setbacks that may occur due to cash flow trap.
Cash management tips
Better cash management leads to the prevention of future financial challenges. Raise an invoice with immediate effect on completion of work, so that you receive the credit at the earliest. Also, follow up should be done to ensure that timely earning is received once the invoice has been generated. In the case of a business set up, planning on ‘working capital budget’ plays a crucial role in determining how far it needs to wait to obtain its revenue. This in turn leads to understanding the effect that the waiting period for obtaining the revenue is bound to create.
‘Profit first concept’ secures your profit at the initial stage itself so that the entrepreneur will be left with some earning for himself. This, in turn, takes care of the owner’s earning beforehand wherein he understands how much minimum expense will lead to his maximum profit under known circumstances. Several software tools have been devised for estimation of budget on monthly basis like YNAB that helps you gain control of money by employing each dollar a task with respect to expenses made, prioritizing the expenses and in exchange of balances by making necessary adjustments in the budget planning. This results in ageing of money that leads to further savings.
