The full title of this book by Jesse Mecham is
PACE: A Small Business Owner’s Guide to Complete Cash Flow Clarity
In my review posted on Amazon.co.uk, I gave the book Four Stars. This means it is Good and Well Worth Reading.
Here is my book review.
Interesting way to think through cash flow management.
A young CPA (accountant) with a software business selling budgeting software has developed a way of managing his cash flow.
As he tells his story about his uncertainties regarding cash flow, he seems remarkably absent minded ideas like a short term cash flow forecast let alone a longer term one. Yes you have to make assumptions and they can be wrong but it’s the way people normally work in bigger organisations as well as startups requiring funding.
He does a good job of explaining the uncertainties brought on by cash flow issues. How, when you haven’t built up a cash buffer, you keep asking “Should I do this? Can I afford it?”
The author is the founder of You Need A Budget for personal financial planning. Strangely it took him a long time to realise the same ideas could be used in a business.
PACE is an acronym which stands for Prioritise, Anticipate, Change and Establish (a buffer).
The method turns cash flow planning on its side. Instead of thinking through the receipts and payments expected, you look at the bank balance. Specifically, you ask yourself how are you going to use it.
I like the fact the author encourages you to change the plan as needed. This fits into my idea of a living business plan. Things happen, you need to adjust with your end goal still in focus.
Anything that helps business owners be proactive about their cash flow rather than reactive and living from hand to mouth, must be a good thing.
As a qualified accountant, I recognise that I do various things subconsciously to help me assess the situation. This method requires you to be very intentional.
I’ve always believed in the idea of separate pots of money for different purposes and having at least two bank accounts, the second for money you’ve put to one side for tax, quarterly rent etc.
Just like the book, I also urge you to build up your cash buffer to take away the stress. Yes you’ll have to make some short term sacrifices but it will be a big relief.
I can see how the method explained can help although you’ll probably need the help of the YNAB software to use it.
I also like the assurance a traditional cash flow forecast can give. The book says cash flow forecasting is bad. I agree that it is when it’s done badly. You are much better being pessimistic rather than optimistic and then taking action to cover the short falls.
The book suffers from the irritating habit of referring you to a website that doesn’t exist.
I’m giving the book a positive recommendation and four stars.
You can buy the book from Amazon.co.uk and Amazon.com
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