“I would like to stick to my cash flow budget this year” is a common thought for many business owners. Unfortunately, the reality of sticking to your cash flow budget can be a lot harder than we often predict at the start of the year.
Your cash flow budget is a budget that maps out your projected cash flow position throughout the months of the year. Your cash flow budget is extremely important for giving you an idea of how much cash will be available at particular times to be able to pay particular expenses.
Your cash flow budget empowers you to make financial decisions in your business.
Your cash flow budget gives you business confidence. We recommend working on your cash flow budget to start the year with a professional such as your accountant or virtual CFO.
1) Monthly budget meeting
Accountability is absolutely critical for making sure you stick to your cash flow budget.
Accountability can come in many forms, but often it can come in a simple reoccurring diary meeting. Just putting the time aside and ensuring that you do not alter that meeting goes a long way to achieving your goals, whether they are cash flow budget related or otherwise.
For most businesses, the optimal timing for their cash flow budget meeting is once per month.
Once per month is manageable and ensure you have enough time to seriously review your cash flow budget position.
2) Hire an external professional
Another critical form of accountability is getting someone external involved.
There are two main benefits to this.
The first is that someone outside the business offers a perspective that you just won’t get on the inside. Many business issues, including cash flow budget analysis, can be solved by simply getting an external set of eyes looking at the issue.
The second benefit is that an external professional such as a virtual CFO or an accountant deals with cash flow budget frequently so has the technical experience and expertise to perform proper cash flow budget analysis.
3) Be honest and realistic with yourself
In business, it is critical to keep a level head and be realistic. Sometimes just be personality temperament, some business owners lean towards a more critical view, and others towards a more optimistic view. However, when it comes to something as critical as your cash flow budget, which determines money in the bank, it is time to take a realistic perspective.
If things are not looking as good as expected regarding your projection for a few months time, for example, you need to make the adjustment.
If you’d like help with your cash flow budget, getting in touch with us about our virtual CFO package.I’m interested in CFO help