Up Your Cash Flow / Goldstein 73-75

75 Cash is one of the most expensive commodities we use in running our business.

...the cost of cash (interest) is one of the largest expense items a company has.

Ask your bookkeeper to grab a sheet a paper and title it "Cash Flow from________to____________" (use only a 15 day period)

A. Cash at the beginning of the period___________

B. Estimated Collections for the period___________

C. Borrowing Anticipated for the period__________

D. Total Cash available____________

E. Bills to be paid (subtract)_________

F. Loan Payments to be made (subtract)__________

G. Payroll and payroll taxes (subtract)__________

H. Ending cash for the period (subtract lines E,F, and G from line D)_____________

After doing the above, at least you know where you will be in the next two weeks. This will give you a very short-term cash projection and allow you to manage your float more effectively. Ideally you should have this kind of projection for at least six months to one year in advance.

Once your profit and loss budget is completed, it is necessary to convert the profit and loss numbers to a cash flow forecast.