Managing Cash In Your Business: Make It A Habit!

Cash Is King

Let’s take a dive into the wonderful world of managing cash. Have you heard the saying, “Cash is king”…I couldn’t agree more! Cash flow management is absolutely crucial, to know financially where you are, where you’ve been, and most importantly, where you’re going. So, let’s explore how to manage your cash effectively and make informed decisions about your financial future.

The Secret Sauce: Rolling Weekly Cash Flow Forecast

The secret sauce to managing cash is forecasting. I recommend using a Rolling Weekly Cash Flow Forecast – a simple yet powerful method for keeping track of your cash flow. You can find a helpful video on Rolling Weekly Cash Flow in my Know Your Numbers Training Academy.

The basic premise is to record your Opening Balance, Receipts, Payments, Net Cash Movement, and Closing Balance. Run this forward for at least 10-13 weeks to get a clear picture of your financial standing for the next three months. Don’t worry if you find it challenging to forecast for the full 13 weeks; you can start with a 4 or 5-week outlook.

Creating an Accurate Forecast: Key Factors to Consider

To create an accurate forecast, consider the following factors:

Aged Debtors: What’s due and when is it due to come in?

Aged Creditors: What’s due, when are you due to pay it, and what are the terms?

Direct Debits and Standing Orders: Make a note of the dates and amounts.

Salaries, PAYE, National Insurance, VAT, and Corporation Tax.

Download a simple cash flow forecast template here!

Staying on Top: Making Cash Flow Management a Habit

Staying on top of your cash flow is key to success. Make it a habit to update your Rolling Cash Flow Forecast every week. It’s a good idea to set aside 30 minutes on a Monday or Tuesday to review and update your forecast with a trusted partner, adviser or mentor. 

The Power of Measurement: Tracking Your Financial Progress

Just remember, if you haven’t measured it, you can’t manage it! By keeping an eye on your cash flow, you’ll know of potential issues, giving you plenty of time to address them. Therefore, you’ll always be prepared for any bumps ahead.

Embracing the Process for a Strong Financial Future

Stay on top of your cash…it’s the foundation of a successful financial future. As you continue to measure and manage your cash flow, you’ll find that doing so becomes easier and more enjoyable. So, let’s embrace the whole process and take control of our financial destiny. Happy cash flow management!