|
||
Measuring cash flowThere are 3 distinct aspects that measure cash flow: core operations, investing, and financing. Every business must produce a cash flow statement; this is separate from the income statement and the balance sheet because it doesn't discuss future cash flow projections that are based on credit.
Operations Investing Financing Preparing Cash Flow Cash flow is the lifeblood of an organization. It is vital to the growth of your business as well as the day-to-day operations. Managing your cash flow will give you an estimate as to what you can expect in the future. To predict your cash flow, you will need to look at the following information:
Just because the last 3 months of receivables have been 80-90 percent doesn't mean this trend will continue into the next month or two. This is why you need to look at the past year before you make your predictions. The upswing in receivables could be because of stimulus money or federal tax returns. Always be mindful of seasonal fluctuations when you are making cash flow projections. Speak to various people at your company to obtain the necessary information you need. Salesmen, collections, credit workers, service representatives, and finance people will all be able to provide you with customer behavior and payment information. Determine how much cash comes in from the customer and how much you make on interest and other fees. If you use a factoring company to collect on bad debts, calculate this money in as well. After you collect the data, create a calendar that outlines when bills are due along with your creditors terms. Having future knowledge of cash outlays will help you plan for them before they are due and this can help your company during times when cash is sparse. Make a list of all the equipment at your office, down to your office supplies so you know exactly when things must be repaired or ordered.
,
|
||
Copyright 2003-2020 by BusinessKnowledgeSource.com - All Rights Reserved
Privacy Policy, Terms of Use |