Cash Flow Matters: Understanding your business's cash flow is crucial for maintaining financial stability, planning your growth, and understanding your funding options. To stay ahead of the game, use cash flow calculations to assess the health of your business and identify potential problems before they happen.
Isn't it super easy? Sort of, cash flow is just the amount you make minus the amount you spend, but a growing business should look a bit deeper at the numbers.
Welcome to our little math class to get those numbers right. Step by step:
Yes, that's the same number as the easier Money In minus Money Out calculation, but it's useful to know where cash flow falls in certain categories. You might not get inventory financing on a monthly basis, so it's good to know you can't count on that $75,000. And you probably don't sell a company van very often. With a deeper look, you can make better bets on how you spend the money you make to grow your business.
You're always better off when you can make informed decisions regarding budgeting, investment, and growth strategies. Cash Flow analysis helps you plan your budget, decide where to invest, and figure out how to make your business grow.
We hope you found this guide helpful. If you have any questions or additional insights to share, please leave a comment below.