![]() When to buy equipment can also be a tax planning item that should be considered if it isn’t essential to buy at a certain time. Look at your past years as well and look for trends to help you decide when to plan for capital expenditures. When is the best time to purchase a new piece of equipment or replace an older one? Looking at your yearly cash flow plan, you can see which months provide you with the excess cash you need to make a purchase. While it’s hard to plan for unexpected equipment failure, you can manage your cash flow for adding new equipment or replacing older, worn-down units. (Download Video Transcript) Look at Capital Expenditures over the Next 3-5 YearsĪnother aspect of restaurant cash flow management is planning capital expenditures over the next 3 to 5 years. Reviewing your annual cash flow monthly will allow you to keep apprised of the expected and better prepared to handle the unexpected. It is also during the end of your offseason that you will begin to prepare for the start of peak season, using excess cash flow to start increasing your inventory and hiring a seasonal workforce. With cash flow at a low point, this excess cash will help to cushion the effect of these slow times. During offseason months, use your excess cash flow from the peak season to support your restaurant.Safeguard the assets by putting the money in an account that doesn’t have check-writing and has restrictions on who can transfer funds from the account.Insurance protection provided by FDIC or NCUA.Higher interest rates than checking account balances.Only keep the cash needed for current operations in checking and then put the excess in a savings or money market account as a measure to safeguard your assets. Deposit some of your excess cash into a reserve account.Better to get a start on this when cash is available than try to set money aside when times are slow. What do you need to cover your taxes for the year? Set aside excess cash from your peak times to be used for year-end tax payments.Here are a few suggestions on how to handle your excess cash flow: How you manage your excess cash during peak season can help your business survive during slower months. There will obviously be more cash flow during peak season and less cash flow during offseason months. Seasonality is a factor for virtually every restaurant and must be considered when budgeting your cash flow. Many restaurants look at their cash flow planning for a year at a time but it’s important to review this plan every month to ensure it is still on track and to see if any changes need to be made.īIZ TIP: How Do Profits and Cash Flow Differ? 3 Restaurant Cash Flow Strategies Budget Cash Flow Monthly How are you managing your restaurant’s cash flow? Having excess cash from your peak season is nice to have but how you manage it is even more important.īelow are 3 considerations to think about when looking at your yearly cash flow projections.
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