A business can make sales and still experience periods when there is not enough cash available to meet immediate expenses.

Cash-flow planning helps you anticipate money coming into and going out of the business.

List Expected Income

Write down the money you expect to receive during the period.

This may include:

• Cash sales
• Customer payments
• Contract payments
• Other business income

Be realistic about when customers are actually likely to pay.

List Expected Expenses

Include regular and upcoming expenses such as:

• Stock purchases
• Rent
• Transport
• Salaries or wages
• Utilities
• Loan repayments
• Supplier payments

Compare Income and Expenses

If expected expenses are greater than expected cash coming in, identify the problem early.

You may need to adjust spending, delay non-essential purchases or improve collection of outstanding customer payments.

Review the Plan Regularly

Cash-flow planning should not be a once-a-year activity.

Review it regularly, especially when your business has irregular income or large upcoming expenses.

Final Tip

Cash flow is about timing as well as amounts. Knowing when money is expected to come in and when payments are due can help you manage your business more effectively.