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4 Simple Strategies to Track Your Cashflow on a Regular Basis

by | Sep 4, 2017 | Cashflow


“Where did all of the cash in my business go?”


I’ve lost count of the number of times I heard from clients.

At a recent workshop, I asked the business owners in the audience if they ever had the thought “I can see a profit on the profit and loss account, but where has the cash gone?” and almost 100% of hands went up.

And a recent ASIC report cited cash flow management as a leading cause of business failure.

So, what can you do to keep track of your cash on a regular basis? At a minimum, you should put together a cashflow forecast by month and better yet, by week. At the end of each month (or week) compare the forecast to actual cash and compare your bank balance to your forecast. If your forecast is out of sync with your actuals, you need to find out why.

Some questions to ask yourself for effective cashflow management:

  • Is your profit below target? If yes, how can you increase sales or reduce costs (without impacting your customer service or sales and marketing capability)?
  • Are customers taking longer to pay you? Do you need to put in place a more rigorous collections system?
  • Is inventory blowing out? If yes, do you have an inventory management system, or could you benefit from implementing one?
  • Is the business short of working capital? If yes, have you drawn out excessive amounts of cash?

The key to effective cashflow management is to design a system that makes sense to you, the business owner. Regularly review it to ensure you manage your business and, ultimately, your cash flow.

For you to do this, your information needs to be in a format that you, the owner, can easily understand. I am a big believer of presenting your financials visually.

The move towards cloud technology is another way to help business owners to keep track of their cash. Most cloud accounting packages have bank feeds. This means you can log in each morning and instantly see your cash position displayed in graphical format.

You should then be able to drill down and see what is causing significant movements. With the ability to track actual versus budgeted performance in real time, you are much better placed to take fast action when things go wrong.

But cloud accounting and bank feeds are not the complete answer.

Small businesses are nimble, able to make quicker decisions and often innovative. But the biggest challenge lies in the ability to understand and interpret the critical numbers in your business.

It’s not your ability to have the numbers. It’s all about your ability to understand the numbers and interpret them.

Business intelligence and technology are essential for small business owners to understand and explain what is really going on. And when you actually ‘get’ it, your cashflow worries will start to become a thing of the past.

Top 5 Tips to Manage Your Business Finances, Without Going Broke.

Do you want to learn how to read you business numbers and get you “financial” act together?  Our Top 5 Tips guide will also show you the 5 essential reports every business owner needs to find the hidden profits in your business.

Amanda Dyason, Founder of ProfitSmarts

We help Australian business owners increase profits, accelerate cash flow and master their financial management. We believe life is too short and precious to be stuck in an under performing business delivering mediocre results.

ProfitSmarts gives you more Profits and consistent Cash flow, putting you back in Control. Because when you get business right, the results are simply amazing.