Tips and Tricks for Effective Cash Flow Management

how to manage cash flow

Handling cash flow effectively is a critical component of financial management for any business. The U.S. Small Business Administration points out that mastering basic cash projections is essential for businesses.

Managing revenue and expenses through projections can help to plan and anticipate higher-priority expenditures needed to keep your business running.

You can use a number of tools and templates to keep track of revenue and expenses accurately, and also to create realistic financial projections.

Here are some tips and tools for managing cash inflows and outflows.

Use Templates in Microsoft Office

If you use Microsoft Office to create spreadsheets and word-processing documents, browse the Templates section for pre-loaded cash flow templates, available free of charge. These templates have tables populated with categories and sections so you can just plug in the figures.

Tip: If you don’t find what you need, visit the MS Office website for more financial document templates. Take your pick of different styles and formats of statements, financial forecasts, and revenue-projection templates. Remember, these templates can be modified and edited. You can always expand the table to create extra categories and add extra columns and rows as needed.

Create Your Own Forecast Spreadsheets

If you prefer to create your own spreadsheets and documents, set up a spreadsheet using your favorite spreadsheet software program with columns that show the time periods for your forecast, rows with sections for inflows and outflows, and subheadings or categories with sources of income and expenditures.

Tip: It’s generally a good idea to break down different sources of revenue so you can evaluate cash outflows that match up to each type of inflow. Track your cash flow from month to month on the same spreadsheet and create a minimum requirement for each month to set realistic financial goals.

Use a Budgeting and Forecasting Software Program

Budgeting, forecasting, and planning software programs can help you organize advanced revenue and expense charts, and create more complex reports. If you need more than just a basic spreadsheet can offer, consider buying or subscribing to a budgeting and forecasting software program.

Some software programs have features that make it easy to forecast multiple financial statements at once, create short-term and long-term projections, and perform strategic planning activities without having to create dozens of different documents. You may also be able to create and export documents to Excel or Word, or create PDFs with a few clicks.

Tip: Take advantage of free trial offers to see if the program really offers what your business needs and is a good fit for you or your financial-planning team.

Build and Maintain an Effective Accounting System

Your financial statements and forecasts will be inaccurate without a good record-keeping system in place. Make sure your accounting department or accountant has created a system that will help you monitor incoming and outgoing cash with accuracy.

Your business should be invoicing customers on schedule, depositing checks daily, and using pre-numbered cash receipts to keep better track of all receipts. You can use an accounting software program to keep track of cash on a daily basis, and also to create accurate budgets and reports.

Tip: Invest in a good accounting-software program and train staff on how to use the program as part of daily business practices. If you have an accounting department, make sure your company’s accounting practices are up-to-date and will help you achieve your financial goals.

Cash flow management is an important part of business operations and you can utilize several online tools and software programs to better organize your cash inflows and outflows. As long as you have an effective accounting system in place, you can use several tools to create accurate financial projections, budgets, and reports.[cf]js[/cf]

Alice Williams

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