Managing Cash Flow in Your Business - Rule 1 Keep your books up to date and accurate

Welcome to a new series of blogs for 2018 on managing Cash Flow in your business.


There are five simple rules that will help you manage your company's cash flow better. Those rules are:

Rule Number 1 - Keep your books up to date and accurate.
Rule Number 2 - Don't be too lenient with your customers.
Rule Number 3 - Keep your accounting simple.
Rule Number 4 - Keep your business and your personal finances separate.
Rule Number 5 - Build a cash reserve.

Today, I am going to delve deeper into the first rule - the rule of keeping your boos up to date.

Rule Number 1 - Keep your books up to date and accurate. 

Often i get asked "why do i need to keep my books up to date? It is too time consuming and i cannot see any value in it." My simple answer to that question is:

Your cash flow is only as good as your accounting and reporting. 

Don’t feel alone, financial record-keeping is the bane of existence for most small business owners and managers.

When you are in the throes of building your business from the ground up, you are often so busy working ‘in the business’ that there’s little time to work ‘on the business’. As a result, accounting records are often the last thing on your mind. So long as there’s money coming in and your bank manager doesn’t have you on speed dial for the wrong reasons, you’re happy to keep going, right?

Make sure your accounting information is updated regularly. If your accounting information is not up to date or not correct, the information that you review will be incorrect. If accounting information is up to date and accurate, then you can see the financial state of your business at a glance.

For example, if your accounting records are not up to date, how will you know the answers to the following questions?


  • The amount of money that is owed by each of your customers
  • The amount of money that you owe to your suppliers
  • The amount of money that you owe to the taxation department
  • The amount of inventory that you have on hand
  • Can i afford to buy a new machine for the business?
  • How much salary can i take the business?
  • Will the bank give me a loan?


These are just a few of the many questions that you should be asking yourself about the benefits of keeping your accounting records up to date. Being on top of your accounting records will also help you maintain a healthy cash flow within your business, and allow you to spot trends in your finances early on. Being able to spot potential financial problems before they become critical is invaluable as you grow your business.

By having accurate financial accounts (or close to), you will have peace of mind knowing that you know your present financial situation thus enabling you to be able to take action on any issues that is impacting upon your business. You will know which customers owe you money and you will know who you owe money too.

Pinpointing the areas of your business that needs proper cash flow management is so much easily with a clean set of books. You know your present financial situation which will enable you to plan for the future.

Here are some tips on how to keep your accounting records up to date.


  1. Hire a qualified bookkeeper to take care of your bookkeeping requirements
  2. Hire a virtual assistant to help you with your daily workload.
  3. Use a cloud accounting solution to keep your accounting records up to date.


I highly recommend that you should prepare at least 3 month cash flow forecast. If you have already prepared a budget for this year, a 3 month cash flow should be simple. If you are new to cash flow forecasting, a little extra time will be required to start the process.You can download a three month cash flow forecast template from my website - https://wealthvisionacadem.wixsite.com/businessplans/download-1

If you would like further information on how to prepare your first cash flow forecast, send me an email to wealthvisionmastery@gmail.com and i shall send you some information.

Cheers,
Peter Adams

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