It’s no secret that positive cash flow is crucial to your business because without it, you can’t pay salaries or other expenses. Don’t think that calculating cash flow is a luxury; it is a necessity. It is one of those things you must analyze on a regular basis in order to maintain a thriving business.
Here are five steps to calculate cash flow.
Five Steps to Calculate Cash Flow
1. Confirm your bank statements.
Verify that the funds you expect to be in the bank are, indeed, there.
2. Make a list of monthly expected cash sources.
List all the recurring revenue that you can count on.
3. Determine your additional monthly income.
Study your sales forecast and determine which deals will close and how quickly you will receive payment.
4. Make a list of monthly expected expenditures.
List all the recurring expenses that you pay each month.
5. Determine additional items you need or would like to spend on this month.
This is the one area that you can juggle up or down, depending on what the numbers from the three items above indicate.