AEM1230-1005-ToPost

AEM1230-1005-ToPost - AEM1230 Principles of...

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AEM1230 Principles of Entrepreneurship and Business Monday 10/5 Cash Flow and Entrepreneurship CFIMITYM Accounting smoke screens and cash flow Calculating cash flow
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Cash Flow is More Important than Your Mother (CFIMITYM) Ken Morse, Director, MIT Entrepreneurship Center
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Rick Smith – NewsUSA
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Rick Smith – NewsUSA This is the way that I found to do it and that is because I couldn't be bothered. I was too entrepreneurial and I just didn't want to do the cash flow stuff. Even though I knew how to do it, I want to have a free flowing thought. So, what I needed is I needed a friend of mine who knew how to do like an Excel spreadsheet or I guess now back when I started in Canada, we did, I think, an Excel spreadsheet. Now what we did when I started the US one, I think it was Lotus and basically a spreadsheet where you can put down with all of your different expenses would be and kind of move it across, kind of a moving cash flow type set up where I was trying to anticipate what would be the sales invoices across client number one, two, three, four, five, and what months those would hit and then try to anticipate what the various expenses would be and, therefore, I was kind of doing a cash flow accounting into the future because as I did that, I was forced to answer a lot of questions for myself in terms of how the business would operate. I also needed to anticipate problems and I was able to anticipate delays. It is like what if the clients are going to take 45 to even though my terms are net due on receipt, the reality is we are looking at 45 days before we collect the funds. That better show up in my cash flow because I can sit in business school and say, Okay, we billed out this and that's that revenue. But the reality is the revenue doesn't arrive now it arrives here, and when that cash shortage shows up, how are you going to finance it and what if 45 days because you don't have a full time accounting department pressures out to 60, or what if one of those vendors doesn't pay you, and all of a sudden
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This note was uploaded on 08/12/2010 for the course AEM 1230 at Cornell.

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AEM1230-1005-ToPost - AEM1230 Principles of...

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