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We’ve all been there. That cash flow crunch, where you aren’t sure if you can make payroll. Or you have bills that need to be paid, but you’re not sure how you’re going to be able to cover them. My Cash Flow Projections will help you plan out your long term cash flow strategy, but what do you do in a pinch?
This is what I’ve done both for myself, and for my clients.
First you’re going to update your banking.
Then you run the balance sheet to see the most current info on what your true balance is.
You might want to run an uncleared transactions report to see if you really have more money in the account, than what the Balance Sheet shows. If you have old uncleared checks outstanding, you can probably add those back to the balance. It’s not likely they’re going to clear. While you’re at it, you should research those to see how you should handle them.
Then key the total cash you have into the short term template.
From there it’s simple.
Key in things like your next payroll.
Other payments that you know are coming out.
Check Bill.com money out clearing, and key in anything that may be coming out, which hasn’t hit the bank account yet.
The template will show you the net cash on hand, so you can make sure you’re covered.
Then there is a section to include money you know is coming in. Be careful here. Do NOT include money someone has promised they are sending. As soon as you decide to include something like that, is when the most reliable of people will fail you. Only include money you know is coming in without the possibility of failure. A credit card payment that was processed, and hasn’t hit the bank account yet. A check you just deposited today. Those sorts of things you know you can count on.
Next there is another area for money out. This is for additional non-priority items that you would like to pay. As you put together this analysis you can see what can be paid.
I actually use this pretty often. My goal is never to have to pull money out of my personal account, but sometimes I have to. This template really helps me do my short term cash flow planning on the fly.
Alongside this analysis, I have my savings calculation. There are lots of people out there with all kinds of fancy formulas and systems, and you can pay a LOT of money for them. I like to keep it simple. 10% of every gross dollar that comes in, needs to go to savings. I don’t always have the cash to do it, so I track where I am vs where I need to be. This way I always have a number in mind, in terms of what needs to be transferred.
Then when I am thinking about spending money, and I know I haven’t transferred everything I should have by now, into savings, then that spending decision is made much more carefully.
For $25 & Up members, I will paste the link to this template in Slack. If you haven’t accepted the invite into Slack yet, let me know and I will re-send your invite.