Small Business Accounting: The Beginnings of Cash Flow

If you’re like most business owners, you don’t know where your business finances are right now. You don’t know what your profit is to date. You don’t have clean financial statements. You don’t know if you’re paying enough in estimated tax. You may not even know if you have enough cash coming in to cover the next payroll run. It weighs on you constantly. It’s the thing that’s constantly in the back of your mind and it’s the fear that keeps you up at night. 
Where to look first to ease your concerns? Cash.
Does your cash balance match your bank account balance? If not, have you reconciled your bank accounts? Reconciling is a process in which you compare what has come through your bank account with what is recorded in your financial system. This process will identify any checks that have been written but the recipient hasn’t yet cashed. 
Reconciling your bank accounts will also identify any payments that have been received but have not yet been deposited in the bank. Believe it or not, this does actually happen. Just last month, I asked a client about three checks totaling just over $10,000 that had been marked as received, but hadn’t been deposited in the bank two months later. It turns out the checks were sitting in the owner’s office, undeposited. 
I have also found invoices that were marked as paid by customers, but the money had not actually been received from the customer. Unfortunately, when you are six months behind on your business accounting when you discover this, it becomes increasingly difficult to collect the money you’re owed. 
Keeping an eye on your cash balance and cash flow ensures you won’t overdraw your account or find yourself in a cash crunch—thinking you had money for payroll, only to find out the day before that you don’t. Staying on top of your cash flow statement every month is an important part of keeping your business finances sorted. 
We know how much time, energy, and passion it takes to run a business. Let us support your big dreams with personalized financial services and get you back to what you do best.
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