If you’ve ever thought, “I must be doing ok because there is money in the bank account and my bills are paid”, you might be right. Or you might not be.
What is Cash Flow & Why is it important?
Cash flow is the way money moves in and out of your account and it’s pretty easy to figure out. If you could put a tracker on your money, what would it show you? After it comes into your bank account, where does it go? When does it go?
You can get a pretty good idea of how the cash is flowing in your business if you do these three simple things, no financial statements needed.
- Look over your recent bank/credit card/paypal statements to see where it’s going. This will also give you an idea of WHEN it is being spent as well.
- What are some of your biggest outflows? How often do they happen?
- List all of your major/recurring expenses by when they come out during the month and then separate it out by week. Now you have an idea of what you need in your account each week to cover costs.
Paying attention to things as little as this can help you get a pulse on the flow of money into and out of your business, which ultimately helps you feel more in control of your money! Whoo hoo!