Cash flow is a form of financial health within a corporation. While total assets and market share can indicate a company's long-term viability, it must also have good access to immediate liquid assets for its day-to-day operations. Cash is the lifeblood of an active company, and it needs to be not only available but also tracked and accounted for to use every dollar to maximum advantage. Budgeting cash flow involves acquiring and tracking outstanding debts and spending what is needed for daily operations.
1. Determine what is owed to your company by your customers for the current month. Adjust your monthly budget to the form of invoicing that is used by your company. Most companies invoice clients to pay within six weeks, meaning that income from invoices would be for debts incurred in the previous month or two.
2. Transfer outstanding debts from the end of one year to the beginning of the next year. Add up everything that your company is owed at the end of December and add this amount to your projected cash income for February.
3. Include nonconventional sources of income along with more typical sales of services and merchandise. These may include interest from loans, deposits or loans that your company has received from banks or other lenders.
4. Identify all of the outgoing expenses that your company incurs. These usually break down into two categories: ongoing, predictable expenses that remain fairly constant, such as payroll, utilities and rent; and unpredictable or unique expenses, such as large capital investments.
5. Track the variance between income and expenses. This can be done using any of a number of spreadsheet programs, such as Excel. A negative variance indicates that your expenses are greater than your income, while a positive variance indicates the opposite. Track this data over the long term to create a record of the ongoing health of your company's budgeted cash flow.
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