Start by looking at your cash flow actuals for the previous six months--the money you collected and the outlays you paid.
(prHWY.com) January 11, 2013 - PA, PA -- PA, Jan 11, 2013 - Start by looking at your cash flow actuals for the previous six months--the money you collected and the outlays you paid. Then build out what you think your income and outlays will be for the next six months. As you make your projections, consider if anything may be changing in a significant way. For example, if your lease is coming due, will you be able to negotiate a better rate for your next term? Is the cost of goods changing in any significant way?
How to Build an Effective Cash Flow Projection - Once you have your best practices in place to manage how your cash comes in, you'll want to build an ongoing cash flow projection.
Invoice Management Software - An automated spend management system, like ExpenseWatch.com, will make this process go much more quickly. Not only do you have historical spend data at your fingertips, you can see spending in the pipeline that is waiting to be approved or paid.
For example, an aging report will let you see spending in the system that hasn't been approved yet. The budget vs. actual report enables you to see requisitions that haven't been ordered and purchase orders that haven't been invoiced. This enables you to manage planned spending and make important decisions about whether to approve or hold off on spending requests.
As you build out your cash flow projections, err on the conservative side. You'll never be 100-percent correct. However, if you can get to 90-percent or better, you are probably being conservative enough.
When you have your projections in place, take a look at the resulting cash balances. Is everything in line with your expectations, based upon what you know about your business?
Effectively managing your cash flow and keeping tabs on cash projections ensures that you can make more intelligence decisions about your business today and in the future.
About the Author:
Vendor Invoices - ExpenseWatch.com delivers spend management products & services for businesses that automate manual, time consuming paper-based processes for company purchases, payable invoices and expense reports, while enabling visibility and control of all company spending
Contact Details
ExpenseWatch.com
620 W. Germantown Pike
Suite 175
Plymouth Meeting, PA 19462
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