The cash flow of your business is simply the movement of money in and out of your business. Your revenues are the money in, and your expenses are the money that goes out. To maintain a successful business, you need to know in advance when you may have cash shortfalls and just how much they will be, so you can plan ahead and assure the long term success of your business.
With effective cash flow management you know when a cash shortfall could occur and how much it will be, so you can make arrangements to have the cash you need to keep your business operating efficiently and avoid a crisis. The most common reason that businesses fail is a cash flow crisis. You can avoid this type of crisis simply by using Cash Flow Updates to track and project your income and expenses, so that you understand exactly what your cash flow position is and when there could be a problem in the future.
There are many reasons why you could face a cash shortage, but if you map out the expectations every week for your revenues, you will see the immediate long term impact of a shortfall when you use Cash Flow Updates. Every week you will replace the projected revenues and expenses with the actual revenues and expenses. Then, you will see how any changes will affect the coming weeks.
Enter the expectations for each week, both revenues and expenses. You’ll see when you run into a cash shortage and what your options are to increase revenue and reduce expenses. You can enter what you think you can do, and you will see how those changes impact the future cash flow right away.
You’ll see exactly when there could be a problem, so you can act now to impact the numbers.
Each week, you’ll confirm the numbers, adjust any discrepancies, and see how the changes affect the weeks to come.