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Thinking about your cash flow

If the three most important things in real estate are “location, location, location,” the first three rules of business are “cash, cash, cash.” It is necessary to be profitable, but “profit” is a number that shows up on your accounts at the end of the year; cash is the money you have in the bank. In a small business, it is cash that determines whether you can pay your bills.

Businesses can’t get money in unless they get their invoices out. However, many business people delay sending out their bills. This may be because they feel uncomfortable asking someone for money, afraid of being challenged on how much they’ve billed, or just too busy working to bill for it. The longer you wait to send out your invoices, the greater the chance you won’t get paid.

No matter what business you’re in, you’re going to have a lag between outgo and income. If you’re a consultant, you have to pay for your phone, stationery, marketing materials, and rent before you get your first client. Once you’ve got them, you’re not going to see complete payment for at least 30-60 days after you finish a project. Things are much worse if you’re a manufacturer. You’ve got to pay for raw materials and equipment many months before you’ll see final payment.

Draw up a cash flow projection. Even if you don’t write up a budget or income statement, it is a good idea to sketch out when you expect money to come in and when you need money to go out. In your projection, be sure to include:

Posted on 15 October '15 by , under General News.

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Transition to retirement

The transition to retirement (TTR) strategy allows you to access some of your super while you continue to work.

You are able to use the TTR strategy if you are aged 55 to 60. You can use it to supplement your income if you reduce your work hours or boost your super and save on tax while you keep working full time.

  • Starting a TTR pension: To start your TTR pension, transfer some of your super to an account-based pension. You have to keep some money in your super account so that you can continue to receive your employer's compulsory contributions as well as any voluntary contributions you may be making.
  • Government benefits and TTR: The benefits you or your partner receive might be impacted if you choose to opt for this strategy. How and what exactly will change might become clearer upon discussing this with a Financial Information Service (FIS) officer.
  • Life insurance and TTR: In some cases, the life insurance cover you have with your super may stop or reduce if you start a TTR pension – check this before making any decisions or changes.

TTR can help ease your mind as you transition into retirement but it can be a bit complex. Before you choose whether you want to use TTR to reduce work hours or save on tax, or even if you want to use TTR altogether, you should figure out how this will impact all aspects of your finances.

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