Frequently Asked Question
Track cash flow FAQS
1. Why is Cash Flow Important?
Cash flow is simply income minus expenses. It's the amount you have left over after you earn all you can and then spend all you need/want to spend. The difference is then what you can save and/or invest. This is the amount that fuels the growth of your net worth. It's this difference that buys the homes, investments, and the like that drives net worth higher and higher. The two parts of generating a strong cash flow -- make the most of your income and limiting your expenses -- so often. If you can grow the former and keep the latter in check, your cash flow will skyrocket, fueling your net worth to new and magnificent heights.
2. Do I require an accountant to draw up my cashflow forecasts?
It is certainly not a bad idea to get expert advice, and an accountant can positively assist you draw up your forecasts. But you do not require an accountant to draw up cashflow forecasts. You must be able to draw up and revise your own forecasts quite easily - particularly if you have accounting software.
3. What can I do if i see a possible cashflow crisis coming down?
You can make sure you have a safety net in place to catch your fall while you fix the problem. Organize finance - an overdraft or emergency fund - so that a one or even two month dip cannot hurt your business.
4. What is Cash flow?
Cash flow is usually understood to be the total amount of cash that is produced and received through a company, along with the amount of cash that is used for expenses of the organization. Usually, tracking cash flow means the immediate recording of transactions in a cash journal. This is considered essential to having a correct picture of the financial constancy of the business, and often can yield information that can be used to improve the economic condition of the company.
5. What Is Cash Flow Software?
Cash flow software is a way of keeping track of the timeline of your income and expenditure on a computer. It's typically aimed at businesses rather than individuals. For greatest businesses it will be a very useful tool, but it's important to select software suitable to your requirements.
It's important to note that cash flow is not the same as profitability. Cash flow does not measure how much money you have coming in and going out in total. Instead it tracks the time of those transactions so that you can forecast what your bank balance will be at a specific time. This can let you spot times when you will not have enough cash on hand for your commitments and take suitable action such as getting an overdraft facility, asking to delay payments, or maintaining you receive money earlier.
