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Accounting/Cash Flow

How Accountants Can Manage Cash Flow

As an accountant, cash flow is likely on your mind on a daily basis. However, as you spend so much of your time focused on other people's money, you may neglect to give your own cash flow the attention it requires.

Forecast, forecast, forecast.

Forecasting cash flow is critical to your business. As an accountant, you're likely already doing this for clients, and of course you should be doing the same thing for your own business. Regularly use software to generate reports so you have an idea of what lies ahead.

As explains1, "Cash flow forecasting involves the creation of a detailed listing of when cash receipts and cash expenditures should occur in the future. This information is needed to make fundraising and investment decisions. The cash flow forecast can be divided into two parts: near-term cash flows that are highly predictable (typically covering a one-month period) and medium-term cash flows that are largely based on revenues that have not yet occurred and supplier invoices that have not yet arrived. The first part of the forecast can be quite accurate, while the second part yields increasingly tenuous results after not much more than a month has passed."

Use a business savings account for backup.

Keep a business savings account open specifically for the purposes of an emergency fund or cash reserve. This is a good back up when cash flow becomes a significant concern, and work on keeping the balance high when you are cash flow positive.

Make sure clients understand your payment policy.

As you know, accounts receivable is where cash flow can often become held up as clients fail to make timely payments or don't pay their full bill. As you do business with a new client, make sure they understand not only what they'll be charged for, but also when and what they'll be responsible for if they do not pay on time.

Consider applying for a business loan.

Even if business is "good," things can take a sharp turn for the worse if cash flow issues are encountered. You don't want to have to apply for a business loan when this is the case, so consider applying for one before issues arise. You are more likely to be approved if your financials are in good shape at the time of application.

Use your personal money if it comes to it.

Chances are you've advised clients to keep their personal and business finances separate from one another, and you are likely doing the same with your own. However, if cash flow becomes a major concern, it's a good idea to tap into your personal funds to inject some cash into the business before things become too dire.

Don't let your dedication to clients' financial needs get in the way of taking care of your own. Keep an eye on cash flow, and take the measures needed to ensure that it does not become a problem you have to deal with when it comes to your business.


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