Cash Flow is the financial life blood of your business.  It’s important to have a very good understanding of how much money you have at a given time as well as a firm grasp on how much and when money is coming in and going out every month.

One of the three major financial reports is the Cash Flow Statement.  This report is beneficial & I will cover it soon, but I think that the “Cash Sheet” is a better day-to-day tool for managing your cash flow.

The “Cash Sheet” is a report that you can keep up with daily or weekly to know exactly how much money you have available.  See, two of the biggest financial mistakes I see business owners make relate to cash management.  First, they don’t have a system for paying bills.  Second, they use their bank balance as a guide to making decisions.

There may not be a perfect system for paying bills but I have found that paying bills twice a month works really well.  That means picking 2 days roughly 15 days apart and only paying bills on those days.  It also helps to get your automatic drafts to come out on those days as well.  For example, your two days could be the 5th and the 20th or the 15th and 25th.  The benefits of this systems are: (1) You save time only paying bills twice a month rather than throughout the week/month (If you read Tim Ferriss’ “4 Hour Work Week”, this is what he refers to as batching).  (2) You can see how and when cash moves in and out of your business.  Cash comes in through deposits and accumulates.  Then cash goes back out as you pay your expenses.  It’s similar to an ocean tide…you see the high tide and low tide twice a month.

Getting this system set up takes a little bit of work on the front end but it’s well worth it in the long run.  Some things you need to do are communicate with your employees and vendors and anybody else who may be effected by the change.  Let them know about your new system and when to expect payments.  If you have any automatic drafts, you will need to change those.  You will have to stay disciplined and not cave in anytime a vendor requests payment.

Your bank account should not be used to make financial decisions mainly because it may not tell the whole truth.  Your bank account might show that you have plenty of money to pay your bills but it doesn’t show you that you have a bank draft and uncleared checks.  This is where the “Cash Sheet” comes in really handy.  It tracks the actual cash that you have available plus shows you what drafts you have coming up.

So, what is a “Cash Sheet”.  There are different formats that you can use but here’s the one I made for my gym.  Feel free to steal it or adjust it to fit your liking.  If you are in fact following the twice a month system mentioned above, you could probably make this a weekly report that you update every Monday.

Grab my cash sheet here.

If you need any help setting up your cash sheet or managing your cash flow, reply to this message and let’s chat.

Here’s that link again:


No Comments