Understanding the Basics

Cash flow is the heart and soul of a small business. As a growing Small or Medium Enterprise (SME), the survival of your business is directly related to the positive management of the money flowing in and out of your business.

In simple terms, cash flow provides you with an insight into the financial ins and outs of your business. Having a clear understanding of your cash flow can help you maintain control and avoid the common pitfalls that most small businesses suffer.

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What is Cash Flow?

Cash flow is the money that moves in and out of your business during a specific period of time. Cash flows in two directions. Into the business and out of the business.

• Incoming cash: The cash coming in from customers that are paying for your products or services. If your customers don’t make payments at the time of purchase, some of your incoming cash flow can be from accounts receivable.
• Outgoing cash: Cash moves out of the business when your business has to pay expenses such as salaries, rents, mortgage, tax payments, and loan payments.
• Change in cash: The ingoing cash minus the outgoing cash describes the change in operating cash flow. If operating cash flow is negative, the business has to use its cash reserves to pay bills and cover other expenses. In the end, this can lead to bankruptcy.

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The Importance of Cashflow Management

Understanding the difference between cash flow and profit is really important. Just because customers are ordering a large number of products does not mean that you can easily manage your bills and expenses.

Difference Between Cash flow and profit: Even though both terms are mistaken for each other, there is a major difference between cash and profit. Cash flow refers to the amount of money that is moving in and out of your business across a regular time period. On the other hand, profit is a metric that provides insight into the level of financial gain your company is making on its products or services. If your company is generating a higher revenue than your operational costs, then you’re generating a profit.  

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Here’s an example to illustrate the point.

You might be able to sell $10,000 worth of products on credit while offering your customer 45-day terms. However, you might have ordered $7,000 worth of supplies to cater to the expenses and supplies needed for that product. You might need to pay your suppliers in 30 days and also cater to $5,000 worth of rent, insurance, and other expenses in less than 45 days.

This means that you won’t have enough money remaining in your business to manage your bills. This can have a detrimental impact on your business survival as you can risk losing suppliers, lenders, and vendors for your business.

Especially growing businesses often struggle with cash flow. This is because as they grow, they will have to invest cash upfront to buy more materials, as in the example above, and typically have to pay before they receive incoming cash.

This is why it is extremely important for small businesses to be aware of their cashflows.  

Why Cashflow Matters – Preventing Business Failure

Lack of cash flow is one of the biggest reasons why SME’s fail.

According to a recent study by Forbes, 90% of startup failures were attributed to inefficient cash flow management.

For SME’s, the lack of cash can be the fastest factor in deteriorating their progress. In the starting phase of your business, dealing with cash flow can be highly complex because you have to deal with running expenses without having regular customers that are paying you. You need to explore other sources of cash, including loans, investors and lines of credit, to get you into a positive cash flow situation. This situation is usually most critical during the first six months of the business. Suppliers are often reluctant to extend credit lines to new businesses because of the inherent risk they have to face.

This often leads to a “cash crunch” if you have not adequately planned the next steps for your company.

Every Business Requires a Personalized Cash Flow Approach

Even though there are some important theoretical steps to follow throughout the cash flow management process, the way you balance your cash flow is personal to the nature of your business.

A key example is the difference between businesses in the production and services sectors. Businesses that maintain inventories often need to shell cash towards the maintenance of the required inventories to make their required sales. On the other hand, service provider businesses don’t need to invest upfront capital on inventory and supply management.

Similarly, another key factoring impacting the business cashflow requirement can be the stage of the company. Rapidly growing companies often need to shell out more cash towards accelerating their growth, whereas stable companies attempt to improve their profitability. For these businesses, conservative cash flow management can be the best step to remain profitable and control high upfront expenses.

What Happens When Your Outward Cashflow Exceeds Your Business Income?

If your operating cash flow is negative, you may face the risk of running out of capital or missing key payment deadlines.

The result can often be in the form of:

• Damaged business reputation
• High penalties
• Disgruntled employees (if salaries are not paid on time)
• Bankruptcy can be the ultimate consequence if your business is unable to recover from negative cash flow.

To prevent this situation, you need to have a careful understanding of the following factors: 

• The capital you have available in your business account.
• The value of the payments you have coming in in the near future.
• The number of expenses you’re dealing with on a regular basis.

Unless you have a clear number assigned to these things, you cannot effectively manage your cash flow. A great way to navigate this situation can be to explore the balance between your business income and outflowing expenses.

However, for that, you need to properly track both categories.

Cash Flow Analysis: How to keep track of your cash flow

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Being aware of your operating income and expenditure helps you tabulate the numbers and have a clear insight into your business direction. A pre-emptive approach will help you avoid potential cashflow bottlenecks before the situation escalates. Having the right information helps you make better decisions by providing you context into the changes you can make to improve your situation.

Here’s an example of how information can help decision-making in different scenarios.

If your business is cash flow positive and you’re turning a profit, you can decide to hire a new employee to market your business and bring in more sales. Without accurately tracking your income and expenses, you’d have to make that decision without knowing about its cash flow consequences. This could have resulted in your cash flow turning out to be negative as a result of the employee salary being paid in a critical period for the business.

How to track cash flow with the cash conversion cycle

To have a clear idea of any company’s cash flow, it can be effective to look into the company’s “Cash Conversion Cycle” (CCC). The company’s CCC provides an insight into how long it takes for the company to convert capital into profits. Understanding CCC is therefore important as it explains how fast you can afford to grow with your current cash reserves.

CCC can be simply calculated by deducing the number of days the capital has been tied up in inventory (Days Inventory) and the amount of time it takes before you get paid (days receivable) from the total amount of credit we can avail from our suppliers (days payable).

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In the landscape of a business that is manufacturing its own goods, the business owner has to procure raw materials that incur a considerable cost on the business. The business has to subsequently invest in the human resource required to convert the raw material into finished products and then sell it to customers.

Example

In the landscape where you’re thinking about purchasing a plot of land and building an apartment that you’re looking to sell, the CCC could look like this:

• Days Payables: Credit For Land Purchase, Materials, & Salaries: 30
• Days inventory: Period it takes to build the apartment: 180
• Days Receivables: Outstanding until the buyer has paid for the apartment

In this example, the CCC would thus be 180+30-30=180

This means that it would take 180 days to convert your cash investment into cash flow profit.

Why should you optimize your Cash Conversion Cycle?

A short CCC is better for the company because it means that you’re able to get faster returns on investments. Companies with shorter CCC are able to grow at much faster rates because of the ability to invest the generated cash flow into growth.

In the example shared above, assuming that the company’s CCC is 180 days, the company will be able to complete two cycles in the year. Assuming the landscape of apartment construction, we could assume the total costs are as follows:

• Land Purchase: 100,000 USD
• Construction: 200,000 USD
• Sale Price: 500,000 USD
• ‍Profit: 200,000 USD

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This means that the company needs to invest $300,000 to generate a profit of $200,000.

With a CCC of 180 days, the company will have $300,000 tied in the investment process and will only be able to complete the projects twice a year for a generated return of $400,000;

However, better management can lead to a much bigger increase in revenue.

Improved Example

Let’s assume that we’re able to renegotiate with our material suppliers to get 60 days’ credit. At the same time, we ensure that the apartment sale is paid as soon as the construction is completed, and we also accelerate the construction process to come down to 120 days. We now have an entirely different scenario.

Our CCC can be calculated based on the following:

• Credit For Land Purchase, Materials, & Salaries: 60
• Period it takes to build the apartment: 120
• Outstanding until the buyer has paid for the apartment: 0

In this example, the CCC would thus be 120+-60=60

This means that it would take only 60 days to convert your cash investment into cash flow profit.

We would have gone from having to finance $300,000 only for 60 days. This means that we can build six apartments in a single year from the same cash capital allocation. With all the variables being equal, we will amplify our income 3X in a single year.

Even though real-life circumstances will have variations from this example, it does not change the fact that the cash conversion cycle can be an extremely powerful factor in fueling your company’s growth.

The cash flow statement: How do you track cash flow developments in your financial accounts?

In simple terms, the cash flow statement provides you with a detailed overview of how much cash is moving in and out of your business over a given period of time. Cash flow statements are amongst the most powerful financial tools to manage your business accounting and keep your business afloat.

Creating Cash flow Statements

If you are managing your own business accounts using Microsoft Excel or an internal bookkeeping tool, you can calculate cash flow statements manually using the information you have available in your balance sheets. If you rely on automated accounting software, you can generate cash flow statements based on the information stored in your ledgers. However, it is essential to consider the fact that your cash flow statements will only be accurate if you are accurately bookkeeping your operations.

The benefit of Cash Flow Statements

Cash flow statements are an essential part of your financial analysis because they provide you context on where you stand. Here’s what makes them important.

• Making Future Cash Flow Projections – Cash flow statements are important tools in allowing to make cash flow projections for future time periods. This planning can help you have a clear idea of your future liquidity and impact your decisions.
• Liquidity Insights – Cash flow statements let you have a clear idea of how much cash you have at your disposal. Liquidity awareness helps you clearly distinguish between things you can and can’t afford.
• Categorical Awareness – By providing you with insights on your assets, liabilities, and equity, cash flow statements help you navigate all the elements of the accounting equation to measure your business performance.

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Methods to Figure Out Your Company’s Cash Flow

There are two commonly accepted methods to have insight into your company’s cash flow. You can choose between the following methods.

Direct Cash Flow Calculation – The direct cash flow method relies on the cumulative information gathered throughout the month to prepare a statement at the end of the month.  This method is usually ineffective because you have to keep a record of cash movement throughout the month and maintain cash receipts for every expense made by your company. The method is functionally less efficient because even if you’re able to concurrently track payments in real-time, you’ll need to rely on the Indirect method to reconcile your statement.

Indirect Cash Flow Calculation – The indirect cash flow calculation method explores the recorded transactions on your income statement and reverses them to calculate your working capital. This method essentially backtracks your income to eliminate irrelevant transactions that are not related to cash movements.  

Figuring Out Cash Flow Using Income Statement & Balance Sheets

You can extrapolate information from your income statement and balance sheet to create a cash flow statement for your business. The income statement offers an overview of the influx of money into your business, while the balance sheet showcases the movement of those transactions into different accounts.

To figure out the cash flow statement for your business, you can simply refer to the following formula.

Income Statement + Balance Sheet = Cash Flow Statement

Tracking Helps You Stay Ahead of the Curve

Concurrently tracking your income and expenses allows you to have a clear picture of your financials at all times. Having preemptive insight into your cash flow direction can help you reprioritize purchases and review variable expenses.

If you find yourself in a negative cash flow situation, you can decide to defer non-essential purchases like cosmetic or hardware upgrades until the situation improves. If your cash flow improves, you can reward your team by splurging on additional expenses.

In either case, regular tracking allows you to be aware of where your finances stand at any given moment.

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Cash Flow Management and Forecasting

Cash flow management is a fundamental aspect of running a successful business. It is the process of tracking, analyzing, and optimizing the net amount of cash receipts minus cash expenses. Effective cash flow management ensures a company has sufficient funds to meet its obligations, such as debt repayments, salaries and new investment opportunities.

One common challenge in cash flow management is non-payment. A business may face delays or non-payment from customers, which can disrupt cash flow and hamper operations. Hence, proactive management and continuous improvement of the cash management process is crucial for a business's financial health.

Rapid and effective resolution of invoice disputes can prevent adverse impacts on cash flow. This can mean ensuring clarity in communication with customers to avoid misunderstandings or disagreements. It could also involve implementing technology that helps in avoiding delays in payment, thereby improving cash flow.

The Role of Cash Flow Management in Sustaining Business Operations

Cash flow management plays an indispensable role in maintaining and sustaining business operations. From paying suppliers, meeting payroll obligations to investing in new ventures, cash outflows are a constant in the business ecosystem. Hence, it is integral to ensure a steady inflow of cash for smooth business operations.

Effective cash flow management can help businesses avoid bankruptcy, especially during challenging times. The importance of the role it plays cannot be overstressed - it ensures that a business has sufficient liquidity to meet its immediate obligations and invest in opportunities supporting growth and expansion.

The implementation of best practices in receivables management can lead to improved cash flow. This involves setting clear payment terms, following up on outstanding invoices, and implementing automated processes to reduce the possibilities of errors and swift transaction times.

Introduction to Cash Flow Forecasting: Why It Matters?

Cash flow forecasting is an invaluable tool that aids businesses in maintaining liquidity and planning for future ventures. By projecting future cash inflows and outflows, businesses can anticipate potential cash shortages or excesses and make informed decisions.

Accurate cash flow forecasting, therefore, forms the crux of financial management in businesses. It allows businesses to confidently plan for necessary investments, manage prudent levels of debt, maximize shareholder returns, and ensure full compliance with all financial obligations.

With cash flow forecasting, businesses can steer around potential financial pitfalls well in advance. It helps strategize, plan, and act precisely on investment, expansion, and operational opportunities that a company may encounter.

Essential Cash Flow Management Strategies and Techniques

There are various strategies and techniques that businesses can employ for effective cash flow management. Centralizing accounts receivable processing can lead to cost efficiencies and loyalty among customers due to consistent practices. Automated processes not only reduce manual errors and transaction time but also free up staff to focus on strategic tasks.

Adopting key performance indicators (KPIs) and defined metrics, such as days sales outstanding (DSO) and collection rates, can help track performance and identify areas for improvement. By focusing on these metrics, a business can identify where the blocks in the cash flow are and strive towards improving them.

On the payment side, adhering to customer instructions on open item payments and using auto-cash can help ensure accuracy. Additionally, measuring throughput and backlog can provide insights into the efficiency of payment processing, helping businesses to streamline their processes and thus improve their cash flow management.

Best Practices for Accurate Cash Flow Forecasting

To ensure accurate cash flow forecasting, businesses should clearly establish best practices. This can mean determining the right frequency for chasing customer payments, striking a balance between being proactive, and not overwhelming customers.

Reporting receivables management results and key activities should be done in a straightforward and timely manner, focusing on risk, turnover, quality, cost, and service dimensions. By focusing on these parameters, a robust and accurate cash forecasting system can be maintained.

Getting the balance right between sales and working capital is crucial too. Prioritizing sales over working capital can lead to late payments and free financing for customers. While this may seem beneficial in the short term, it can have adverse effects in the long run, such as incurring financing charges or tying up capital that could be invested in growth opportunities.

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What is Burn Rate, and How do You Calculate it?

Businesses that are not generating a profitable operating cash flow will eventually run out of capital. This is calculated via the burn rate.

Let’s explain this.

The most dangerous scenario for any business is to run out of cash. The burn rate provides insights into how fast your company is spending money. Conventionally calculated on a monthly basis, burn rate is essential for startups (and other non-profitable businesses) to predict when they’ll be able to turn a profit. In simple terms, burn rate is a measure of how fast your company will run out of cash when your spending exceeds your earning.

It is important to track your burn to have a clear insight into how long your company can stay operational without turning a profit.

Calculating Gross Burn Rate

To effectively calculate your gross burn rate, you need to know about the following core variables.

• Operating Expenses – Your operating expenses include everything you need on a monthly basis to keep your business going. Some of the most common operational expenses include salaries, rent, utilities, insurance, and other core costs your business has to bear to survive.  
• Total business capital – The total business capital is the cash you initially invested in the business through your personal efforts or external investments.

Here’s an example to illustrate burn rate calculation for a standard business.

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Example

Let’s assume that your business is spending $5,000 per month in operational expenses, and you started your business with $50,000 of your own investment.

$5,000/$50,000 = 0.10

By multiplying it by a hundred, you get 10%. This means that your burn rate is 10%. Every month in business, you spend 10% of your initial investment.

Calculating Net Burn Rate

To calculate your net burn rate, you need to know about your starting capital, monthly expenses, and total monthly revenue.  

In this calculation, you practically divide your operational income by the total capital invested into the business in the beginning.

Alternatively, if you’re looking to know about your burn rate at a specific period of time, you can use your total cash levels at that time to calculate the rate.

Example

Let’s assume your business is generating a revenue of $2,500, but you’re still spending $5,000 on your expenses.

Here’s how you can calculate your burn rate.

($2,500-$5000)/$50,000

-$2,500/$50,000 = -0.05

Multiply the result by 100, and you get a net burn rate of 5%.

In this case, your practical income is negative because you’re still not generating positive cash flow for your business.

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How to stay on top of incoming cash by optimizing revenue and getting paid faster

As a business owner, it is important to have control over your income to maximize its true potential. As we have seen in chapter 2, you can improve your growth dramatically, by increasing your cash conversion cycle (CCC). One way to do so is by getting your sales invoices paid faster.

The time it takes for customers to pay your sales invoices is also called DSO (Days Sales Outstanding) and  can be calculated by the following formula:

Accounts Receivables / Net Credit Sales X 365

To optimize your cash flow you lower your DSO by getting customers to pay faster.

As we discussed earlier, faster payment can be a game-changer for your business because they can allow you to enhance your cash flow and decrease CCC.

Here are some ways you can decrease your payment receiving timing and get paid faster:

• Offering Incentives for Early Payments – Based on your payment structure, it can be a great idea to offer incentives to customers that make advance payments. You can also encourage customers to make payments on time by adding interest charges on late payments. However, to maintain a consistent approach, make sure that the details of the payment process are outlined in the initial customer agreement.
• Using Digital Payment Tools – It can be difficult to manually follow up with customers and demand payments for your goods and services. Digital tools provide you with the convenience to seamlessly send invoices and follow up on payments without requiring you to manually communicate with customers. Explore an effective digital tool that can help your business get paid on time.
• Following Up on Late Payments – Don’t wait until payments are a month overdue before communicating with your customers. Create a seamless process to communicate with customers the day after the payment is due. You can implement simple email and phone-call-based mechanisms to simplify the process. Many late payments are often due to the customer forgetting to make the payment. A simple remind can often simplify things quickly.

Ways to Track incoming cash for Your Business

Your small business can be at risk of bankruptcy even if you’re generating high sales. Tracking your cash flow helps you have a clear idea of when money will be coming into your business to replenish outgoing flows.

Here are some ways you can improve cash flow tracking for your business:

• ‍Set Up Accounts Receivable Calendar – Setting up a calendar allows you to project your incoming revenues in advance. If you give your customers a limited number of days to make the payments, you can project incoming revenues and have clarity over the days you receive payments. Accounts receivables often make up a significant percentage of business revenue and can help businesses improve financial forecasting as well.‍
• Shift Away from Data Entry – Most conventional businesses rely on data entry to track their cash flow. This can be an inefficient method because data entry cannot adequately keep up with the requirements of a rapidly growing business. The slow entry process also limits your growth potential because you have to repeatedly wait for data entry to stay up-to-date with your numbers. Data entry can also lead to mistakes because of the manual nature of the entry process. It is important to shift to a modern alternative that helps you automatically track payments using cutting-edge technology. Using cloud accounting software will help you get a ton of the work done. ‍
• Separate Your Banking Account/Payment Method – One of the biggest mistakes business owners make is to use their personal credit/debit card to make business payments for expenses and outgoing payments. This can often convolute payment separation and lead to confusion between personal and business accounts. Having a separate business account simplifies your taxation process as you only have to deal with relevant information pertaining to your business expenses.

Enhancing Cash Flow for Seasonal Businesses

Some businesses have unique time periods in the year when they experience a surge in sales and customer inquiries. Some of the most common peak seasons include the holidays and thanksgiving. However, without having an effective planning process in place, it can be challenging for your business to properly manage the fluctuations in sales resulting from seasonal sales.

Fluctuating business income can be a major contributing factor in inconsistent cash flow as well. Here are some steps you can take to manage this situation:

• ‍Understanding Sales Trends: Peeking into your sales figures helps you have a clear idea of your challenges. Taking a look at your previous profit and loss figures will help you have detailed insight into your busy and slow times throughout the year. By taking a look into your numbers, you’ll be able to effectively manage new expenses and navigate your budget throughout challenging times.‍
• Maximizing Seasonal Revenue: Most small and medium businesses often struggle to provide the required products and services to customers during the peak season. It is common to see businesses turn down customers because they don’t have the ability to cater to new orders. To prevent this situation, it is essential to pre-emptively evaluate your human resource and planning strategies and maximize the revenue. Effectively managing the peak season can allow you to generate additional revenue to balance out slower periods and maintain a positive cash flow.‍
• Managing Downturns with Marketing: When your business is going through an off-peak season, it can be a great idea to double down on marketing efforts to get more projects and increase your revenue. Whether that is through reaching out to past clients or networking in new avenues, marketing efforts are an integral part of sustaining your business through downturns. Effectively using digital marketing tools and data is essential to maximize your impact and reach the right audience. You can also try to implement new ideas like blogs, podcasts, and social volunteering.‍
• Decreasing Operational Expenses: Whether you’re thinking about buying new hardware or going on a company vacation, it is a better idea to tune down your expenses during the off-peak season to ensure that you’re able to maintain a positive cash flow approach even during slow business times.  

How to take control of outgoing cash by minimizing expenses

The biggest challenge for business owners is to navigate the balance between expenses and income. It is essential to maintain low expenses and increase income.

Once you’ve put in effort in enhancing your income, it is time to focus on your business expenses to handle the other end of the equation.

Ways to Reduce Your Business Expenses – Toning it Down

Without cutting down on your business expenses, you’ll keep trickling down a ton of your hard-earned revenue and end up in a negative cash flow situation. Cutting down your expenses is an integral part of turning things around.

When talking about expenses we can divide them into fixed and variable costs.

You should always optimize for having as low fixed costs as possible, because they don't lead to more revenue. Variable costs are a consequence of making revenue, and therefore in some way positive. As your business grows you should try to keep your fixed costs stable, but accept that variable costs will increase as a consequence of revenue growth.

To understand your cost start to categorize your expenses into fixed vs. variable costs.

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Categorize Your Expenses

It can be a great idea to divide your expenses into categories that are similar to your tax filing format. Some of the most common expense categories include the following elements.

• Contractors/Employee Salaries
• Vehicular Expenses
• Advertising
• Meals
• Education
• Bank and Fees

Devise A Business Budget

Once you have a clear understanding of your recurring costs and expenses, it can be a great idea to devise a comprehensive business budget. Having a budget limits unnecessary spending and provides you with a financial framework to deal with your expenses. To have the most impact, divide your budget into multiple sections with monthly spending limits to have effective control over your spending.

Use Efficient Time Tracking

Effectively managing working hours is a key challenge for most businesses. It can be a great idea to introduce advanced time tracking tools to help your business stay on top of time management. Time tracking also allows you to efficiently allocate time towards meetings, deliverables, and other critical activities without wasting time on unnecessary elements.

Decrease Existing Expenses

Whether you’re spending too much money on expensive dinners or allocating too much of your budget to hardware purchases, evaluating your existing expenses will provide you with clear insight into where you’re spending your money. Attempt to decrease expenses in areas that do not positively contribute to the growth of your business.

Renegotiate Lending Terms

With market interest rates dropping down to record lows during the pandemic, it is a great idea to explore renegotiation options with your lenders to renew your lending at lower rates. Capitalizing on existing low rates can allow you to peg your interest-based payments for a substantial period in the future.

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Plan your cash flow with a liquidity budget

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Crisis events often come without warning. That is why it's extremely important to develop a liquidity budget to estimate your future revenues and expenses to have clear insight on areas where you may fall short.

Making future cash flow projects in advance allows you to pre-emptively know about periods when your business might struggle with revenue. This allows you to optimize your business direction and make advance arrangements like credit allocations, staff relocation, and bonus restructuring. Regardless of the nature of your business, having a comprehensive liquidity budget is highly recommended to help you manage emergencies.

Here are the key steps that you can take to develop a comprehensive budget.

1. ‍ Decide the Cash Flow Period: Determining the time period in which your business might struggle is essential to have an accurate cash flow projection. This time period depends primarily on the nature of your business and can range from a weekly projection all the way up to a monthly projection.‍
2. Estimating Sales: Estimating the total number of sales within the forecasting period will allow you to anticipate your cash flow in advance. This could be your services procured, items sold, or pre-booked sales.‍
3. Estimating Total Revenue: Multiply the total number of items you're expecting to sell and the total number of hours you're expected to bill to your customers within the forecasting period with your average pricing. This will give you the total estimated revenue.‍
4. Estimating Revenue Payments: Estimate the total time it will take for incoming payments to come to your business accounts. Factor in the time it might take for different payment methods, including debit cards, cheques, and cash payments.‍
5. Add Individual Expenses: Categorize all the expenses that will be incurred within the defined projection period into fixed and variable expenses and tabulate them into the budget.‍
6. Calculate Net Surplus or Deficit: Calculate the total net surplus or deficit for your business by subtracting the expenses from your income over the projected period.‍
7. Determine Strategic Direction: If your business is in a net deficit over the specified period, explore whether you're able to cover it using cash on hand or credit allocations from external facilities. In the scenario where your business is generating a profit, explore areas that you'll need to focus on
8. Comprehensive Budget Review: The budget review process will allow you to individually review every major category and re-evaluate your business direction. Categorically review the following areas.‍
9. Income/Sales: Review the total revenue you're projected to bring in over the specified time period. Explore the possibility of tweaking your income strategy to enhance sales and improve your revenue. Think of ways you can bring in more money into your business and factor that into steps 2 to 6.‍
10. Review Payment Timings: Review the time when your business will receive the payments into your accounts. Explore ways you can encourage customers to make cash payments to your business. Think about reducing credit card processing fees if you have additional leeway to attract digital consumers. Categorize any changes into steps 4 to 6
11. ‍Review Expenses: Review all the itemized expenses to explore if any expenses can be deferred in the long term without impacting your business operations. Explore the variable costs to see areas that can be managed to improve cash flow liquidity at critical times.‍
12. Budget Completion: Once you're done with the review process and end up with a satisfactory liquidity budget, print out the details and finalize the budget to keep you prepared.

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