A 13-week rolling cash flow budget lets you harness the past, present and future of your company to arrive at a comprehensive analysis of its overall financial well-being – making you a more effective leader and decision-maker.
An effective cash flow is rooted in your company’s historical trends and considers current initiatives and any internal and external factors that may impact the financial security of your business – including past, present and future billing and payment patterns. In order to dig a little further to gain a little more insight into your company, I recommend:
- Analyzing your accounts receivable to determine ways to quickly turn them in to cash.
- Reviewing your current inventory levels to determine what is old or obsolete and what can be used to generate more revenue.
- Going over your accounts payable to optimize your own financial obligations.
- Looking at your non-core assets to determine how much money is being spent and whether or not a more lucrative avenue is available.
Finally, don’t forget to update your cash flow regularly. Setting up a cash flow dashboard will take a little extra effort at first, but maintaining it is simple. Then, if done correctly, you will have the ability to accurately estimate your business’s variable costs and expected sales at a moment’s notice – and that is a very powerful tool to have.
This article was published in the January 2016 issue of Columbus Business First – Ask The Expert.