Making the Best Use Of Your Cash Flow

Cash flow plans are living entities and must constantly be modified as you learn new things about your business.  One way to maximize the usefulness of the cash flow forecast is to regularly compare each month’s projected figures with each month’s actual performance figures.  This can be achieved by just having a second column for the actual performance figures right alongside each of the forecast columns in the cash flow worksheet.  As the true strengths and weaknesses of your business unfold before your eyes, actual patterns of cash movement emerge.  Significant discrepancies between the planned and actual figures can be quite informative. 

For example, if the business’ actual figures are failing to meet your forecasted cash revenue receipts for three months running, this is a signal that it is time to review the year’s projections.  It may also require some follow-up with the sales staff to determine the reason for this.   Such follow-up may result in delaying the stock replenishment plan, or applying to the bank for an increase in the upper limit of the revolving line of credit.  Approaching the bank to increase an operating loan should be done well in advance of the date when the additional funds are required.  Do not leave cash inflow to chance.

Legal Notice And Disclaimer

Privacy Statement