If you are already working with an accountant, you probably already have the tools to manage your cash flow. If you are not, this week’s AllBusiness.com in the San Francisco Chronicle offers some very good advice on how to stay on top of your cash flow.
What is cash flow? It is projection of both income and expenses during a fixed period of time, usually one month. Obviously, the ideal is for income to exceed expenses so you can pay your bills in a timely way. In other words, you want to have a positive cash flow. When you’re starting out, this just doesn’t always happen, and predicting income can be very tricky. The Chronicle article offers these recommendations, which you should read in full:
- Establish a receivable process
- Forecast your cash flow
- Track expenses
- Project your sales
- Track your sales
- Prepare for cash-flow imbalance
- Seek professional help [if you don’t think you can manage your company’s cash flow yourself]
Predicting income and anticipating expenses is not enough. Track the actual numbers to see how well you are doing.
Successful management of cash flow doesn’t guarantee that your business will be successful; you still need to be able to generate sufficient income. But if the income is there, cash flow management can make the difference between the success and failure of your business.