Do you like cash flow?  Me too.  In fact, one of the critical evaluations of a business for sale is what the historic cash flow to the owner is.

Preparing a cash flow to anticipate the future is important too.  (Do you remember my mantra?  “I am not an accountant.”)  So, for this commentary, I will merely encourage your practicing cash flow as a method of business management.  Wikipedia defines cash flow HERE.

Examples of how cash flows can help the business owner:

1)  Anticipate needing cash and finding before needed.

2) Manage payables to get through lean cash periods without having to borrow.

3) Understand the cash to expect when items such as principal payments on loans don’t show up in your profit and loss statement.

4) Make arrangements to borrow the right sum of money not just the cost of something, reducing interest.

5)  Look at only cash and not items that are not cash, such as depreciation and amortization.

My exercise with cash flow has a rolling 12 month view, even if it is June and the next 12 months includes a period not even budgeted.  I should be looking out at least 12 months, regardless the time of year.

It is an exercise, in my opinion, as critical as a budget and should be part of the entire planning and monitoring of any business.