Guide to Calculating Your Business Cash Flow

Use a cash-flow modeling spreadsheet template

Accuracy is critical with cash-flow forecasting. Thus, a tested spreadsheet template will contain formulas that will work. The best spreadsheet templates offer easy-to-understand graphics.

I recommend: Develop cash-flow projections using the Small Business Administration's downloadable Excel spreadsheet. Additional cash flow spreadsheets can be found at Michigan's Small Business and Technology Development Center. Study up on Excel's collaborative, charting and other advanced features.

Perform "what if" analysis

Find break-even points for each of your product or service lines for each of your departments. Create three or more projections detailing best-case, worst-case and most likely scenarios based on the current economic situation and your company's growth goals.

I recommend: Use Microsoft's training resources to perform "what if" analyses using Excel. QuickBooks users can contact professional advisors through the software vendor's Web site who are specially trained to customize the popular accounting software package.

Assemble financial records and employee forecasts

Set aside a multi-day period when the key people within your company can formulate their own departmental cash-flow projections, then add these forecasts to your own.

I recommend: Acquaint employees unfamiliar with cash-flow forecasting with this MasterCard International's free downloadable guide available at Startup Journal.

Maintain a record of cash flow forecasts to improve your accuracy over time

Create multi-year charts comparing cash-flow projections to actual year-end results.

I recommend: QuickBooks Premier Editions embeds forecasting functions within the popular accounting software suite, and shows you how your company's numbers compare to norms within 120 different industries. As your business grows, so will the complexity of its cash-flow projecting spreadsheets. Browse available software packages at Capterra's Business Performance Management Software Directory