Learn The Secrets To Calculating Cash Flow!

Controlling the cash flow (money) in your business is like maintaining “gas in your fuel tank”.

Without controlling the money in your business your engine will finally stop (and so will your business)!

There are some basic issues you must address related to the income and expenses in the business.

These issues include:

  • How do you account for the income and expenses in your business?
  • What system do you use to know how much cash is available in the business?
  • How often do you examine the cash flow in the business so you can avoid real problems such as being placed on “credit-hold” by a supplier, making payroll, paying taxes, making loan payments, etc?
  • How do you plan for expansion or large purchases of equipment, buildings or offices?

The Small Business Administration (SBA) has several excellent articles that will help you answer many of these questions. Go to the SBA’s site to see a very good overview on cash flow.

There is another good site where you can find your local SBA office where you can talk with SBA officials about how you may be able to get funding for your business.

Calculating cash flow can be confusing. But it is so important you will have to force yourself to learn how to calculate and plan the sources and uses of your money.

Here is a simple cash flow calculator that will get you started.

There are affordable software programs available that simplify much of the work to be done in planning cash flow. One such company is PaloAlto Software. They have been providing planning software to businesses for several years and are recognized as one of the best in the business.

In most cases you will probably need an accountant to help establish the method by which you organize your financial records and keep track of the money in the business.

If you do not have an accountant you will need to spend plenty of time searching to find a good fit for you and your business.

There are several searchable databases on the Internet to locate an accountant or CPA however, one of the best ways to find a qualified accountant would be to talk with several friends who own a business to get a referral.

Don’t always look for the accountant that charge the lowest fees.

Remember the old adage, “You get what you pay for”.

This applies to the accountants as well.

Spending the appropriate time learning how to calculate cash flow and controlling the money in your business will eliminate much of the frustrations many business owners experience.

You can avoid many serious problems that can be disastrous for your business by learning where the cash is in the business and how it flows in and out of your business.

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