Hiding from your bank balance, that is…
A couple days ago, as I was opening my bedroom blinds, just like I do every single morning, I happened to notice the tree just under my window had sprouted colorful pink blossoms. It took me a moment to realize that it’s actually SPRING. I’ve looked out my window and only seen gray for what feels like six years instead of months, so this tiny vision of spring took me by surprise.
And because I’m always drawing parallels to financial management (I can’t help it!), I immediately thought of cash.
Cash flow has ups and downs, and for many leaders and businesses, is often seasonal. We have strong months when we invest in all-the-things, followed by not-so-strong months when our bank balance makes us cringe, or even worse, hide in fear.
Just like the seasons, cash feels unpredictable, uncontrollable, and frustrating at times (ahem, snow in April!) and we hope that by not thinking about it too much, it will magically fix itself. But we logically know our cash flow issues won’t be fixed via ignorance.
The problem is, most leaders I talk to don’t do any cash flow forecasting. When I take off my finance hat and put myself in their shoes, I get it. A cash flow forecast is not something that’s easily generated from Quickbooks, your bookkeeper probably doesn’t have enough info to do it herself, and it involves a spreadsheet. Yuck.
But I want to help you! Cash flow forecasting does NOT have to be scary or take more than 30 minutes a month (seriously), but it WILL help you regain control over your organization and confidence in your financial sustainability.
Here are three quick tips (and a freebie!):
- Understand your cash inflows and outflows each month. As the leader of your organization, you could be able to answer these questions: How long do your clients or donors take to pay you? Which months are the strongest or most profitable? What are your average monthly expenses? Do your expenses fluctuate throughout the year or are they pretty steady?
- Get into the habit of checking your bank balance weekly. Neglecting your cash accounts will NOT help you regain control and confidence in your financial management. Know your numbers!
- Plot all these numbers into a spreadsheet and update that baby monthly! Lucky for you, I’ve created a template that will help you do this yourself, very easily. And because I adore you, I also created a video that walks you through exactly how to use the template so it is completely foolproof. (It’s all included in one great Playbook.) Download it here!
#cashmanagement
