Most business owners make financial decisions in business on the basis of bank statements. The money coming in and going out from your bank account is not the true measure of cash flow in your business.

The majority of business owners do not like accounting and finance so they ignore them until there is an emergency situation. Ignoring cash flow and the inability to predict cash flow can lead to severe challenges and financial crunch in business.

As a business owner, you need to focus on 3 major things to anticipate, analyze and improve your cash flow

1.     Account Statements

2.     Account Payables and Receivables

3.     Management Reports


There are 3 key statements you need to monitor on monthly basis.

1.     Income — Expense statement (which is also called Profit and Loss statement)

2.     Balance Sheet (what your business owns and what it owes in the market)

3.     Cash-flow statement (how much money is coming in and going out of your business)

If you do not have an accountant or bookkeeper I strongly recommend you get an accountant or bookkeeper. You can also outsource to accounting firms if you do not want to hire for full-time or you can also hire for part-time.

Every single month ask your accountant or bookkeeper to give you above mentioned 3 statements on the first week of every month so study the statements and make your budget and cash flow strategy according to statements.


On studying cash-flow statements you will be in a position to know your current accounts payables and accounts receivables.

Here are a few strategies you can consider to improve your cash flow.

 ·        List down all your suppliers and their credit terms (if you are buying on credit) and negotiate with them on increasing the payment period.

 ·        If you are buying goods in cash ask for a cash discount.

 ·        If you are giving credit to your clients or customers negotiate with them to reduce the payment period.

 ·        Chase up the outstanding receivables


Most business owners operate by looking in their bank statement which is an inappropriate strategy to plan and predict cash flow.

Make it a habit to receive the weekly cash flow report every week. You can do it at the end of the week or at the beginning of the week.

Your weekly cash flow report should consist of the following things:

 Accounts Receivables — Which payments are due to receive in the current week?

·     Accounts Payable — Which payments are to be paid in the current week?

·    Fixed expenses which are due to be paid in the current week. Eg. Rent, Salaries, Utility Bills, etc.

·    Any other expenses to be paid in the current week.

Based on the weekly cash flow report plan your payments in that particular week.

Constantly look for new ways of doing things and look for new strategies which will improve your cash flow.

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