Cash Flow as Sleep Aid

September 23, 2010 Written by Frances Schagen


Sleep Like A Baby

Originally uploaded by peasap

A good cash flow tool will help you sleep at night. More than anything, it’s money worries that wake up small business owners in the middle of the night.

Following your passion, rather than taking a job means that your cash flow may be erratic. It’s better to know and have the opportunity to plan than it is to always be reacting. As in, the devil you know is better than getting evicted for not paying your rent.

It’s not hard to do, but it takes discipline. It helps to do it every day or 2 and to tie it in with another activity. Habits and change are another discussion entirely.

For an overview of cash flow have a look at the pixilated workshop on cash flow here.

I use a spreadsheet. The top line is the money in the bank at the beginning of the week. The next few rows are the money I expect to bring in that week.

The section below that is the money coming out of the bank. This will include all automatic payments and cash withdrawals, as well as cheques and bill payments.

Start with the beginning balance, add the deposits, subtract the money coming out and you are left with your ending bank balance. If it is a negative number, you have only 2 choices: add more money, or push a payment(s) back. Knowing this is coming gives you a little more time to plan.

I project this out for the next few months. I know what work I am doing, billing and will receive. I have been doing this long enough that I don’t get surprised too often.

Having this in place, means I can see if there are problems coming up. I know, for instance, that August and September are very slow months and that October and November are busy. That means I have to shuffle expenses early on and catch everything up later. Or better still, save some cash from the busy spring season, but that cash tends to end up in the vacation fund because I know I can make it all up in Oct/Nov.

Having a good cash flow tool in hand to use is the first step in making your way to prosperity.

Do It, Know Where You Are Going
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