When cash is queen, how to map it out?

In the accounting world, we refer a lot to “cashflow forecast”, which pretty much means to figure our the cash the company will have at the end of a period.

Personally, I feel “forecast” sounds too woo-woo. It’s like predicting something. Sounds unrealistic. That’s why I use the word “map”.

Cash flow Map is just figuring out where you cash will be at the end of the next period. Why it’s important?

Knowing your expected income and expenses will help you see how much moolah you have. Simple like that.

The truth is: most financial statements are not dealing with hard-cold cash. They deal with “assets”, “Liabilities”, “invoices”, “equity”. At the end of the day, we do want to know how much hard cash we have.

Another reason why I like to map my cash flow is to know what my enough is. In terms of clients, sales, etc. We don’t need all the clients or all the sales in the universe. Knowing your cash allows you to rest.

Now, let’s get to how to figure out your cashflow map!

You’ll need:

  1. Bank Statements
  2. Credit card statements
  3. Open Contracts
  4. Expected sales.

The fist thing you will do is look at your bank statement balance.

Next, you’ll go over any contracts you have still to invoice for the next month, then any expected sales – this is based on your pipeline or historical data.

Finally, we’ll add all the expenses expected for the month we are mapping.

Your cash flow map is:

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