5 Steps To Manage Cash Flow

Ever wish you had a crystal ball when it came to the future of your business’ finances?

Something to answer questions like:

“Can I afford to hire 2 part-time employees during my busy season this spring?”, or

“When will I have enough money to pull the trigger on that expensive new piece of equipment?”

Now, we don’t exactly have a crystal ball – but we do have the next best thing:

𝙲𝚊𝚜𝚑 𝙵𝚕𝚘𝚠 𝙵𝚘𝚛𝚎𝚌𝚊𝚜𝚝𝚒𝚗𝚐

𝗪𝗛𝗔𝗧 𝗜𝗦 𝗜𝗧?

Cash flow forecasting is a way of using your past and current financial history to estimate your future cash flow in your business.  

You can forecast any range of dates, from short-term, 30-day forecasts to long-term, 1 or 2-year forecasts.  (Keep in mind – short-term forecasts are more reliable than long-term ones!)

𝗛𝗢𝗪 𝗗𝗢𝗘𝗦 𝗜𝗧 𝗪𝗢𝗥𝗞?

𝗦𝘁𝗲𝗽 𝟭: 𝗚𝗲𝘁 𝘆𝗼𝘂𝗿 𝗳𝗶𝗻𝗮𝗻𝗰𝗲𝘀 𝘂𝗽 𝘁𝗼 𝗱𝗮𝘁𝗲 – After all, how can you predict the future … if you don’t even understand the present??

𝗦𝘁𝗲𝗽 𝟮: 𝗥𝘂𝗻 𝗳𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗿𝗲𝗽𝗼𝗿𝘁𝘀 – Specifically, your cash flow report and your P+L report. Make sure you include at least a full year of business data!

𝗦𝘁𝗲𝗽 𝟯: 𝗔𝗻𝗮𝗹𝘆𝘇𝗲 𝘁𝗵𝗲 𝗺𝗼𝗻𝗲𝘆 𝗰𝗼𝗺𝗶𝗻𝗴 𝗶𝗻 – Look for patterns in the past and apply them to the future. Will I have the same clients, and projects, for the foreseeable future?  Will I sell assets, take out loans, or receive grants?

𝗦𝘁𝗲𝗽 𝟰: 𝗔𝗻𝗮𝗹𝘆𝘇𝗲 𝘁𝗵𝗲 𝗺𝗼𝗻𝗲𝘆 𝗴𝗼𝗶𝗻𝗴 𝗼𝘂𝘁 – Again, look for patterns in the past and apply them to the future. Are my regular expenses going to stay the same – or increase?  Do I have any large one-time expenses to account for (like equipment purchases, accountant fees, etc.)?

𝗦𝘁𝗲𝗽 𝟱: 𝗙𝗼𝗿𝗲𝗰𝗮𝘀𝘁 𝗮𝘄𝗮𝘆! – Now, take everything you learned and project it out over the next 1, 3, or 6 months!  And then you’ll have a solid foundation of data (𝘢𝘭𝘮𝘰𝘴𝘵 as good as a crystal ball) to answer your future budget questions

Sidenote: this process can also help you spot and solve problems in the present, too – like high expenses or a negative cash flow!

What about you?  Have you ever used cash flow forecasting in your business?  Or do you just “wing it” when making new purchases? 

Let us guess … you liked that crystal ball idea, but we lost you the moment we used that financial jargon-sounding term of “cash flow forecasting”, right?  

If that’s you, then no worries! 

Most of our clients don’t understand this process either … because they hired Abacus Business Solutions to handle it for them! 

So if you want some help predicting the cash flow in your business – just reach out! Our A-Team would love to help.                                

www.chooseabacus.com • info@chooseabacus.com • (352) 432-8104

Kerry Postel – Founder CEO Principal

Abacus Business Solutions

Has Higher National Diploma in Business and Finance, Certified in QuickBooks, Member of American Institute of Bookkeepers, and over 20 years of bookkeeping experience including construction, travel, restaurants, events management, and other various professional services.

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