How To Track Cash Flow For Your Business
Does setting up a cash flow statement sound daunting? Some things are best left to the professionals.
We have talked endlessly on the importance of this financial statement on this blog in the past. You will have a much better understanding of how your business is doing, what is working, and where you can improve or reinvest once you've had one done properly.
Think of your cash flow statement as a budget for your business. Budgets help us keep our households running smoothly, the same is true for your business. Let's go over some cash flow basics:
Tracking Money Coming In
Start by listing out every single source of income you have. It helps to break it down month by month, but depending on your business, a weekly or even daily cash flow statement may be appropriate.
Unlike with regular accounting, when it comes to your cash flow statement, you're only tracking the money actually being deposited. The bills you sent out to customers or clients don't count until they have been paid.
Tracking Money Going Out
Next, we're tracking the money going out; your business expenses. This list can be pretty short if you're working for yourself out of your home, or it can be quite lengthy if you're dealing with inventory, buildings, utilities, employees and more.
This may seem like a daunting task at first, but for so many of us, quite a few expenses are fixed and occur every single month. For example, your phone and Internet service expenses most likely occur monthly. Or there may be services or memberships you subscribe to. This is a good place to start as you can copy them over from month to month making your cash flow tracking going forward much easier.
Time To Analyze The Data
The key to this process is now to look at everything and use this information, with the help of your accountant, to make smarter business decisions.
Knowing what money you have coming in, will help you decide how much to spend (and when) on business upgrades, hiring a new assistant etc. Start tracking your cash flow now and see for yourself how it will change the way you're making business decisions, and how it will help your business flourish.
Speak to an expert at Triple Play Tax Services today so discuss how beneficial a cash flow statement will be to you and your business.
We have talked endlessly on the importance of this financial statement on this blog in the past. You will have a much better understanding of how your business is doing, what is working, and where you can improve or reinvest once you've had one done properly.
Think of your cash flow statement as a budget for your business. Budgets help us keep our households running smoothly, the same is true for your business. Let's go over some cash flow basics:
Tracking Money Coming In
Start by listing out every single source of income you have. It helps to break it down month by month, but depending on your business, a weekly or even daily cash flow statement may be appropriate.
Unlike with regular accounting, when it comes to your cash flow statement, you're only tracking the money actually being deposited. The bills you sent out to customers or clients don't count until they have been paid.
Tracking Money Going Out
Next, we're tracking the money going out; your business expenses. This list can be pretty short if you're working for yourself out of your home, or it can be quite lengthy if you're dealing with inventory, buildings, utilities, employees and more.
This may seem like a daunting task at first, but for so many of us, quite a few expenses are fixed and occur every single month. For example, your phone and Internet service expenses most likely occur monthly. Or there may be services or memberships you subscribe to. This is a good place to start as you can copy them over from month to month making your cash flow tracking going forward much easier.
Time To Analyze The Data
The key to this process is now to look at everything and use this information, with the help of your accountant, to make smarter business decisions.
Knowing what money you have coming in, will help you decide how much to spend (and when) on business upgrades, hiring a new assistant etc. Start tracking your cash flow now and see for yourself how it will change the way you're making business decisions, and how it will help your business flourish.
Speak to an expert at Triple Play Tax Services today so discuss how beneficial a cash flow statement will be to you and your business.
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