Meshio.com

I’ve been doing abit of consulting for a few young and starting-up companies and I realized how similar these companies are when it comes to managing their finance.

First of all, after running the company for sometime, the founder begin losing track of their companies’ financial stats.

Yes, it happens. Maybe it’s due to the priority of these companies in securing more projects, increasing sales and getting involved in various other non-financial related activities, such as talent recruiting and day-to-day operation and administration chores. When you’re running a small start-up with very limited resources, finance is something you will dread looking into. You just feel that as long as the bills are being paid, clients are sending in the cheques, everything is just going on fine. Nothing is further from the truth. How can you start charting the company’s future when you don’t even know where you are standing right now.

Hence, they begin to see the next question- are they on the right track financially? Being on the right track means are they doing what they have initially set out to do. Have they been too busy trying to keep the company in the black that they’ve forgotten their initial goals to start the business. Notice how this question is different from asking “Are we making profit?” You might be making profit to keep the company afloat, but have you neglected potential channels that could have propelled the growth of the company. It’s good to be looking busy, but it’s more important to be busying in the right places.

Hence, I started to dig up their financial records. And after a half-day analysis, the figures can be quite revealing, even to the Company’s directors themselves. Also, after a few anaylysis exercises, I also came to realize the structural similiarity between a company’s financial planning and a personal one.

After what I’ve learnt from these analysis, I began to attempt “porting” the principles so that it can be applied to an individual’s own planning. And the result is the Meshio Personal Cash Flow System (MPCFS). Quite a mouthful eh?

Benefits of MPCFS
Of course, I won’t be advocating this to anyone until I myself finds it to be helpful. And helpful it is in the following way:-

1) Tracking Your Ins and Outs down to the last sen.

2) Don’t have to keep track of all the minute spendings and messy receipts. It takes too much discipline and the entire exercise would be futile the moment you forgot how much was the nasi lemak you ate this morning. I always believe in simplicity, and this personal cash flow system is as simple as it can get! I am not saying you shouldn’t keep track of all the receipts and bills. In fact, it’s a good practice, especially if you are running your own business. Just go through this system with me and you will find out why you don’t need to get so messy.

3) Balancing Your Total Inflow and Total Outflow to check if you’re positive or negative at the end of the “fiscal month”.

4) Group your income channels and expenses channels so you can clearly see the ground you are standing, and how you can chart your way out of an impending financial disaster.

However, this is not a recipe to becoming a millionaire. The steps laid out in the Meshio Personal Cash Flow Planner is meant to be used as a guide to help you keep track of your monies. The reason why you should really do this yourself (DIY) is because you hold the sole responsibility to your wealth, or the lack of it. You are the Chief Financial Officer of YOU Inc. Rest assure that no one else would feel a pinch in their pocket if you are not doing well financially.

So, let’s not waste any more time and get down to BUSINESS ;-)

Ingredients to Get Started
Here are all the tools you will need to get started.

1) An Excel Sheet that will help you record your bank transactions.

2) One Savings Account with an ATM Card to it. Activate Online Banking.

3) One Current Account, if possible without an ATM Card to it. Activate Online Banking.

That’s it, and we are ready to start tracking your money down to the last sen, and without using too much time.

Ground Rules
Here’re a few ground rules to set.

Rule 1: The current account should be the single point where your income is channeled into. This means that any sources of income should go into this account, even if it’s cash, it should be deposited into this account. No exceptions to this rule or else the system won’t work. If you have many current accounts where you are receiving incomes from, it’s going to get abit tricky. It’s best to consolidate the transactions to one current account if possible.

Rule 2: Issue cheques for payments and make sure you have a category for the payments. For example, you might category for Housing Installments, Car Installments, Utilities, Petty Cash, Bulk Claims etc. Try to keep the amount of items this category to less than 10 to reduce “administrative” work later on. Also, make sure they are relevant as well.

Rule 3: If you have credit card, you can integrate into the system with a bit of effort. Say you are paying off the credit card using a cheque, make sure you break down each of the payments you are making according to the category you have made in Rule 2. Example, if you are paying your credit with a RM 1,000 cheque, you should make a clear note that RM 400 is for Petrol, RM 400 is for Insurance Policies and RM 200 is for Books & Stationeries. Again, consolidation of your credit cards will help you out in this one.

Rule 4: You must balance out your account every month. This helps you to keep your financial stats in order and your mind fresh about the spendings and incomes you’ve made the past month. It’s best if you can actually track them every other week, which you should, since that would really let you be in control.

Rule 5: For cash, channel the cash that you need from your Current Account to your Savings Account (the one with the ATM Card). Okie, you might ask why don’t you just ATM the money out from the Current Account, since the transaction will be logged in the statement anyway?” Good question. But here’s why I don’t recommend you do that.

There will be cases where your income comes in cash, say someone paid you RM 1328.23 for a Freelance project you did. If you are going to bank in this amount of money, you would have to go directly to the teller, and that means only during office hours. With an extra Savings Account, you can bank in the RM 1350.00 (round it to the nearest RM 50) and transfer electronically or via the ATM machine to your Current Account the actual figure, in this case RM 1328.23 and it will be properly logged in your statement, which you can later on categorized as “Income- Freelance Project”.

Also, by not having an ATM facility to your Current Account will allow unnecessary withdrawals that can confuse you later on.

So making a habit of withdrawing cash only from your Savings Account will make the statement much clearer and easier in the future.

Rule 6:Pay your monthly utility bills online using either your Credit Card (since you can get Reward Points, and you have to pay them anyway) or your Current Account. This saves alot of time and reduce unnecessary paperwork.

That’s basically the 6 ground rules you need to abide to ensure the Meshio Cash Flow Planner system works flawlessly. The system allows a high degree of flexibility, which means you get to setup your own channels for incomes, expenses, incoming transactions, outgoing transactions etc. However, with high flexibility comes a high degree of possible errors and that’s why it might take you a while before you can really sort things out with this Cash Flow system.

Conclusion
The benefits are a plenty. First, you know how much income you are generating every month. If you are only earning money from one source, then this is probably a no-brainer. However, if you have multiple streams of income, which is something you should be working at, this is a good way to check how each of your channels are performing and how you can tweak them to your favor. Similarly, you would also know where are the big-ticket items in your expenses list that’s sucking you dry every month. If the Insurance Policies is really taxing you up, consider a reduction of premium or if the housing rental is downsizing your lifestyle, consider a switch to a smaller unit. Get a smaller car is you need to. Strike out bills that you can live without. Change and live within your means, and that’s when you really start controlling your finances, and eventually you can chart out what you need to do to get from here to there.

Remember, frugality, not more money is the key to better living.

That said, if you have problem configuring this system to work for you, you can schedule an appointment with me and see if I can sort it out for you. No consultation fee until further notice ;-)

The catch is simple- I need you to feedback to me if this system works for you and the problems you faced while trying to make it work.

• Meshio Cash Flow Projector
• The Better Way to Save
• Unauthorised Withdrawals from Banking Accounts
• Goals Should Be Fun!
• Financial Responsibility
• Automated Savings Chart
• Random Ringgit: Scams or...?
• Malaysian Plastic Defaults to Rise