Cash Flow Mgmt. Made Easy With QuickBooks


We reveal proven methods you can implement now to take control of your cash flow!


What is Cash Flow?

nj, ct, ny quickbooksCash flow is a vital measurement showing the net value of money coming and leaving your business. Assessing cash inflows and outflows is critically important to any business which relies heavily on funding its own operations. Startup businesses and young companies are vulnerable to cash flow fluctuations and this is one of the biggest reasons why small businesses fail.

Cash flow is often confused with net profit and I often hear business owners complain the company is profitable, yet they have little cash flow left over for operations. First here is the definition for Cash Flow and for Net Income:

Cash Flow is a measurement representing net cash left over from in inflow and cash outflow.

Net Profit shows the net difference between sales and expenses.

For small businesses cash flow is generated primarily from two sources: sales and borrowed funds. Occasionally small businesses can bring additional cash from a sale of its fixed assets such as furniture or equipment. Conversely, cash outflows result from payment for operating activities, interest, taxes and loan payments. Profit is used to figure out your taxes while cash flow is used to plan, budget, and execute daily operations.

NOTE: Profitable companies can go bankrupt if they disregard the importance of cash flow

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How to Analyze Your Cash Flow in QuickBooks


Learning how to manage your company’s cash flow will increase your business survival rate. In addition, you’ll be better prepared to grow and protect your business. Businesses who use computerized accounting software like QuickBooks are typically better equipped to manage cash flow effectively because these programs can quickly and precisely deliver in-depth information on demand.

To begin taking control of your cash flow, you’ll first need to understand the components that influence your cash inflows and outflows. An in-depth review of these components will expose issues that cause cash flow leaks, gaps, and inconsistencies. Plugging gaps, closing leaks and balancing out cash fluctuations is essential to successful cash flow management.

Analyze these components in your QuickBooks software:

  • Analyze and monitor accounts receivable using the Open Invoice report and Aging Reports found under the “Customers and Receivables” to assess your average collection days and amounts owed. You might need to start to regularly send out statements along with late fees charged to slow paying customers. These can be easily prepared using the “Assess Finance Charges” feature in the Customers menu.
  • Change your credit policy by reducing your credit terms or offer discounts for early payment. This will greatly affect the timing of your invoice collections so you can receive your money faster. Changing credit terms can be easily done right on the invoice or directly in the customer’s profile in the Payment Settings Tab.
  • Inventory turnover must be assessed to ensure stagnant inventory is not tying up your available cash. You can review the Inventory by Stock Item and Inventory Valuation Detail to reveal surplus or unsalable inventory.
  • Negotiate accounts payable terms to match your own invoice credit policy. Try paying your vendors on the same payment terms as you extend to your customers. Although this is not always possible to achieve, even if you can negotiate it with some vendors it will help prevent unpleasant financial glitches.
  • Review Statement of Cash Flow found in the Reports menu under the Company & Financial option. Use this report to monitor how much money you will have coming and going out at any particular period and to see your starting and ending cash balances.