Academy / Money and pricing / Lesson 5
Lesson 5 of 7 · 6 min
Cash flow: why a busy shop can still run out of money
Profit is what you make on paper. Cash flow is the money you actually have today. A shop can sell a lot and still have no money to restock, because cash is stuck in stock, debts or delayed payments.
Profit na wetin you make for paper. Cash flow na the money wey dey your hand today. Shop fit sell plenty and still no get money to restock, because the cash don hook for stock, debt or payment wey never land.
In this lesson you’ll learn
- Profit vs cash in hand
- Where cash gets stuck
- Planning when money comes in and goes out
- Keeping a small buffer
Do it in 4 steps
- 1List money coming inSales you expect this month, and when the money will reach your bank.
- 2List money going outStock, rent, data, salaries, and the dates you must pay.
- 3Watch slow stock and creditStock that doesn’t move and customers who owe you are cash you can’t use.
- 4Keep a bufferSet aside a little from every sale until you have one month of fixed costs saved.
Your task
Write down every payment you must make in the next four weeks and the money you expect in. Mark any week where out is bigger than in.
Write every payment wey you must make for the next four weeks and the money wey you expect make e enter. Mark any week where wetin dey comot pass wetin dey enter.
Before you finish, tick theseTap to tick
Quick check
You have ₦400,000 of stock but ₦20,000 in your account and rent is due. What is the problem?
Stock is not cash until it sells. Buy in smaller amounts and keep a buffer.