Tracking your cash flow is the number one responsibility of a business owner. The buck literally stops with you.

Today, tomorrow, next month and next year knowing when the cash comes into your account and when it is about to leave can make or break your business. It is that simple.

What do you need to track in your cash flow?

1. Your budget

• Exactly how much money do you have in your account to start the month?• What are your regular, recurring expenses. In other words, how much money do you need every month to pay all of your bills?• What is your break-even point?

2. Your receivables

• What payments are scheduled to be received and for how much• Are your customers typically on-time with their payments? Who's chronically late?• Timing of the payments is critical to track!• Predict when you expect the cash to enter your bank account, not just the documented 'due by' date.

3. Your Payables

• What payments are scheduled to go out and for how much?• Never pay early! You may need that cash for unexpected expenses.• Never pay late! You will develop a bad reputation and your suppliers will be unwilling to give any wiggle room when an actual problem puts you in a pinch.

How do you handle cash flow projections?

1. An educated guess

• Record when you think these payments will either enter your account or leave it

• Review when your customers have been paying their bills

• Get to know who's highly reliable and who isn't

• Take steps to deal with customers that are chronic late-payers

2. Update, update, update

• Constantly update this information as things change

• Update at the same time when you invoice and pay bills

3. Review frequently

• Review your cash flow projections regularly so you don't get a nasty surprise

• It's worth the time. A quick review weekly can save you hours when you avoid a crunch.

90% Accuracy in Your Projections

Projections won't be 100% accurate. That's ok. A best guess given the information you have right now is important.

Why? The sooner you see the impending cash crunch, the earlier you can do something about it.

Time is your friend.

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Dryrun - A better way to run the numbers.