Whether or not the New Year is the start of a new fiscal year for your business, the changing of the calendar is always a good time to take a step back and map out the financial aspects of your business. 

Take a look at your revenues, expenses and cash flows over the course of the entire year. Those three data lines not only give you an overall sense of your financial health but they also help you identify whether any gaps exist on a month-to-month basis. Because, even if your overall year-end financial health is good, there may still be problem areas at certain times of the year that need to be addressed. There’s far less stress if your financials remain consistent rather than simply working themselves out at the end. 

For example, if your past financial reports show that March is a financially difficult month because of higher than average expenses but lower than average revenues, you can plan ahead and make spending adjustments. One tactic is to differ the expense payment to a later date when cash flows return to normal or accelerate to an earlier date before cash flows dip down. This technique works well for capital expenses, such as new computers, which although may be necessary, can simply be moved to later in the year. 

However, this technique doesn’t solve every cash flow versus expenses problem because some expenses cannot be accelerated or differed and must be paid at regularly scheduled intervals.

Large companies meet this problem by accruing cash on a regular basis so that there is always money available to pay these regularly scheduled expenses. SMBs on the other hand, tend to overlook this technique because there is a constant and immediate need for the cash. 

However, by mapping out the financial aspects of your business, you can forecast when certain set expenses – such as insurance, rent or HST payments – are due. By recognizing these payment dates, it becomes simple to skim the necessary payments off the top of your revenues and never consider it as part of your overall cash flow. 

Doing so not only makes sure your expenses are fully paid, on time, but also improves the overall financial health of your business.

Share this

Latest Insights

Recent posts from our blog

How to plan for seasonal variances in your cash flow

Have you noticed unexpected seasonal variances in your company’s cash flow? If your business is seasonally-based (a lawn care or snow removal company, for example), it’s normal for your cash flow to vary depending on the time of year. Unfortunately, many companies who shouldn’t be affected by the seasons still experience peaks and valleys in […]

Organizational growth and restructuring: Is your business ready to take the next steps?

Are you planning to take your business to the next level? Before you start growing your company, you need to ensure that your organizational structure is prepped for this major shift. Don’t just jump in head first – make sure you follow our key prep tips to keep your growth sustainable and successful.   3 […]

Do you have a file you need to send to us? Would you like to make a payement?