top of page

Why You Must Track Cash Flow In Your Business Starting Now

Updated: Sep 15, 2021

Take a deep breath because today, we’re talking about cash flow. I know. It’s an area many entrepreneurs avoid dealing with. But the truth is that the more you ignore it, the scarier it becomes in your head. In real life, though, it isn’t that bad! And once you do the work to clean up your books and find accounting systems that work with you, cash flow will be your new favorite business term!

Unlike knowing where your receipts are and using an accounting software, there isn’t just one simple fix to cash flow issues since the problem has the potential to be so many things. That said, there are two sticky areas that most entrepreneurs find problematic in their cash flow: 1) Not having money in your account even though you're being paid and 2) Wanting to pay yourself a set amount that your business can’t support (yet).

Let’s take a look at the first one today. That feeling of not knowing where your money is going and feeling like you’re always behind or scrambling to pay your bills is not at all fun, so we’ll address that right now. Answers to that second conundrum, wanting to pay yourself a certain amount, can be found here.

Cash Flow: What to Do When It Feels Like It’s Slipping Through Your Fingers Like the Sands of Time

I worked with a client who made $20,000 one day and couldn’t pay their people the next. The problem wasn’t that they were terribly irresponsible with money and decided to purchase a fancy car or, be still my heart, a lot of accounting software, they simply had no idea where it was going.

(Yes, you could argue, not knowing is irresponsible. But we all make our choices and they’re all valid. So no shaming, just learning and moving forward.)

The reason for that lack of awareness was that they didn’t have a system to track their cash flowing around their business. There was no way of knowing what needed to be saved when bills were due, and what was leftover in their account. So they definitely had no idea that the money that was coming in needed to be earmarked for other things (like paying contractors) immediately, which created a mismatch in terms of timing and spending beyond the business’s means.

By having a system in place to track their cash flow and other responsibilities that they needed their money for, they could have prevented a very messy situation.

Keep Your Sands In Your Hourglass, or Know Where Your Money Is

As I alluded to, having a system set up to track your cash flow will help you to see where it needs to go (and how much of it you really have at the end of the day). That’s why I was so insistent upon having a separate bank account for your business as well as accounting software that provides real-time data. It will help you break the cycle of money coming in and immediately going out.

Being able to forecast what’s coming up will give you a high-level lay of the land. When you can map it out and you have it all visually in front of you, you can see where there may be some potential mismatches.

You can see very quickly “Oh no. It’s the 8th and I need to pay my contractors on the 15th of the month but I won’t be able to have money coming in to cover that until the 17th of the month” and either move that money to a separate bank account so you don’t accidentally spend it, or work to move payment dates, or otherwise ensure that you have the money available on the 15th to cover your bills.

How to Break the Cycle and Be Aware of Your Cash Flow

Having a high-level lay of the land will bring to light any issues in cash flow you have (as if you weren’t already aware). Then, you can use that data to make decisions in your business like A) Changing your cycle that you pay your contractors and B) Standardizing the days of the month you charge your customers.

First, go over your last 3 months of expenses and total up what you brought in and what you paid out. Pay special attention to mismatches - ie: when there’s more going out than coming in. Next, make a list or chart of when expenses are billed and when invoices are deposited into your account.

Now, moving forward, stagger your income and expenses so you always have cash in the bank. One of my clients is doing this fantastically. She only charges her customers on certain days (1st and 15th), then she places any outgoing expenses after she gets paid so she knows there is cash in the bank.


Cash flow may sound like a large, scary topic, but it really isn’t. Once you have some systems in place to give you data and face that data and what it’s telling you, you can make wise, confident decisions. Soon, you won’t be panicking over what’s really in your account and “How am I going to pay my employees? How am I going to cover this bill?”

If this is hitting close to home, you may also be guilty of the other two money blunders I see almost every entrepreneur doing. Don’t worry - I’ll show you exactly how to correct these mistakes so you can feel confident when it comes to your numbers and have peace of mind that your numbers are in order so you can get back to doing what you do best!

41 views0 comments


bottom of page