Cash Flow is King

Posted by Sheila Burkett & filed under Solutions.


When running a business, managing your cash flow is critical. For those running on a shoestring budget, it becomes important to watch all expected revenue streams along with all expected expenses. Monitoring it week to week and adjusting along the way allows you to ensure you can pay the bills and know when account receivables are out of hand.

I recommend keeping a high-level spreadsheet that forecast future cash flow along with monitoring current actual cash flow. All company leaders should understand what expected revenue is coming in and the impact of delayed projects, sales or closing on proposals will have on the business. This will also help you manage your fixed versus variable costs and determine the level of cash you need on hand each week.

A word of caution! Do not look at a revenue windfall as an immediate opportunity to distribute cash to owners or increase payouts. This is a sure fire way to end up with many expenses and no cash to pay them with in the future.