Cash Flow Analysis & Projections

Cash is king and understanding your company’s cash flows is paramount to any successful business.

At the same time, cash flow is a huge headache for business owners. While it’s often an issue for startups, cash flow can plague entrepreneurs throughout the life of the business, leaving you feeling out of control and unable to achieve your goals. Getting a handle on cash flow can make an enormous difference in your quality of life and level of success.

Business owners often run into cash flow problems because they draw too much money out of the company without properly anticipating the company’s inflows and upcoming liabilities. Many business owners simply don’t have the tools they need to properly forecast cash flows.

Net Income Isn’t Cash Flow

Having a good month—a high net income—doesn’t necessarily mean you can take a bigger draw or spend more on things like new equipment. Yet many business owners make this mistake and it causes problems, like being unable to meet other financial obligations such as income taxes, GST, or payroll remittances. You may have had your best month ever, but you’re broke because the money is sitting in your receivables.

To properly manage your cash flow, you need to monitor all your receivables and payables—what’s coming in and what’s going out.

You may be able to solve your business’s cash flow issues by working with your CPA. At Achen Henderson, we address cash flow early in our work with clients to help ensure they understand their upcoming collections and obligations and can achieve their goals. This involves evaluating the financial condition of the company, budgeting and forecasting future financing requirements, and tracking sources and uses of cash. Financial management services are part of our Unburdened and Unleashed packages.

Accurate cash flow projections require us to get to know your business and industry. You also need to be realistic. You might think it’s better to assume you’ll hit the high numbers, especially if you’re doing a cash flow projection to obtain financing, but that only puts you and your business at risk.

Cash flow analysis and projections help you make decisions regarding whether or not your business can expand, hire some help, buy a vehicle, sustain a tough period, and so on, without running into financial difficulty.