Managing Your Cash Flow

If you don't have enough money in the bank on the day that a bill becomes due, you may be in trouble. Making sales and receiving payment for those sales often happen at different times, and it's easy to be caught short of cash. This regular movement of cash in and out of your business is known as cash flow. Sage 50 Accounting can help you manage and analyze your cash flow so you can examine where your revenues and expenses are coming from, and project future cash flow.

Where is my money coming from or going to?

When operating a business, it's not always easy to assess where your earnings and expenses are being allocated. The Statement of Cash Flows helps you determine which categories of cash flow (operating, investing, financing) you should be most concerned about, and shows the changes to various accounts over a period of time.

Forecasting Cash Flow

A cash flow projection can be extremely useful for managing your business and ensuring that you have enough money to cover future bills. This report summarizes the bills that will be coming due in the future as well as money you should be receiving from customers and other sources.

Two ways to forecast potential cash-flow problems:

Compare total unpaid purchases to total sales due at each month end. If the total unpaid purchases are greater than the total sales due, this indicates that you will need to spend more cash than you will receive in the next month (a potential cash-flow problem).
Check the ratio of total sales due to total sales at each month end. (the ratio equals sales due divided by sales). If the ratio increases from month to month, this indicates that money owed to you is increasing more than the sales your company is generating (so, while sales may be good, the amount of cash flowing into the business is not keeping pace). If either of these calculations indicates a potential problem, you should take some time to assess the status of your overdue accounts.

What do you want to do?

Display a Cash Flow Projection

Display a Statement of Cash Flows

Manage overdue accounts