Although many businesses thrive in sales and revenue, often that positive growth spurt gets in the way of their financials and accounting. If this sounds familiar, it might be time to look at creating a new system to help ensure your cash flow is working for you, not the other way around. 

Here are some accounting advisor tips to help you establish a system that uses daily, weekly, monthly, and yearly management to help keep you on top of your cash flow and your financial goals in sight.

Daily Accounting Cash Flow Tasks

Evaluate your Accounts Receivable and Payable daily to get a handle on money coming and going through the business. Sometimes just a quick spot check can open your eyes to an issue. 

Scanning Accounts Payable not only helps you keep bigger invoices top of mind so you can plan for its effects on cash flow, it also allows you to spot any negligent expenses eating into your profit. Is there a subscription you thought you canceled or a piece of software no one on the team uses anymore? Looking at a sea of quarterly (or even monthly) expenses can seem overwhelming and things can get lost. But doing this spot check daily helps you focus on what’s happening now.

Checking Accounts Receivable daily can help with creating a better system for collecting invoices. You begin to really understand what’s outstanding and how long it is taking to get it. This daily bookkeeping spot check may lead you to eliminate Accounts Receivable entirely. Is it possible to get paid upfront before work begins? These spot checks will motivate you to think about it.

Weekly Accounting Cash Flow Tasks

Evaluating your cash planning weekly is a must to ensure you reach your financial goals. Foundational goals include, hitting payroll, paying your quarterly taxes, establishing consistent profit. 

But there are many unique goals each company can have as well. Is there anything you are needing to invest in to grow your business? Are you hoping to reward your team with a holiday bonus? Or become a debt free company? 

Setting goals is a must, but evaluating them so you stay on task is where the magic happens. Set up correctly, this weekly task does not have to take long. But the goal won’t happen overnight and so it needs to be nurtured.

Using the Mike Michalowicz Profit First System allows you to create a sustainable business, so you continue to enjoy long-term success. The idea is to create special accounts designed to meet the needs of your core business including:

  1. Income/revenue account
  2. Profit account
  3. Operating expenses account
  4. Owner’s pay account
  5. Tax account

 These accounts keep you on top of your cash so you can easily evaluate each area of your business every week at a glance. 

Once established, you can also create additional accounts specific to your unique goals such as adding some team members to meet growing demand, rewarding employees who have contributed to your success or even investing in a new company to expand your wealth.

Instead of trying to dole out money from one pool of cash, this divide-and-conquer method ensures you allot money to meet the needs of the most important elements of your business. And makes it very simple to monitor each week to know where you stand.

Monthly Accounting Cash Flow Tasks

Each month you should check your Profit and Loss Statement to see how it compares to your overall budget. Some important financial indicators to track include:

  • Sales and profits
  • Cash flow for short-term obligations
  • Cost of Goods Sold
  • Insurance
  • Rent

 Setting up your reporting so you can review this monthly task quickly and succinctly is key. Your accounting software is good, but a thorough spreadsheet can work too. Work with your Accounting Advisor to get this set up for you so you maximize your time with the numbers. 

You know the important indicators in your business, so making time to review them once a month just makes good business sense.

Yearly Accounting Cash Flow Tasks

Most businesses are very aware of their yearly cash flow and financial numbers because tax time forces us to be. But to continue to enjoy profits year after year, you should make time each year to review your Gross Margin and your overall budget.

Gross margin allows you to evaluate the products and services you offer and check your profit margins against each one. Here’s where you can look for signs that fulfillment costs have gone up or down and make adjustments. This practice will reveal which products and services are bringing in the highest profit margins and uncover the ones you may be losing money on. This important data allows you to increase marketing for your most profitable product and service lines and consider eliminating the ones draining time, energy, and profit.

 An annual budget review looks at your established budget and reveals where you have knocked it out of the ballpark, where you’ve completely under budgeted and everything in between. The facts of your business allow you to adjust based on what the year reveals and helps keep you profitable. For example, do you see trends in seasonal sale shifts or are the numbers indicating it’s time for a change in team size? These are the insights that keep you responsive to your needs, so you create a more sustainable, profitable business.

How An Accounting Advisor Can Help You Manage Your Cash Flow

Accountability and experience are so important in ensuring your books are working for you, not the other way around. Having a trusted Accounting Advisor keeps you on task with these timely reviews and can set up your reporting so each check in provides insight, not headaches. 

Our Business Compass Program helps you gain clarity, confidence and control of your financials so checking in on how things are going becomes something you look forward to. Contact our business coaching experts for a Free 30-minute intro call to see if the program is right for you.

For more clarity, confidence and control of your business financials, visit our Entrepreneur’s Guide to Accounting for more valuable articles like this one.