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Cash Flow and Budgeting Analysis

cash flow being analyzedFor many small business owners, cash flow and cash flow management are often considered simply as synonyms for profit and loss. However, while there is a connection between the two, they are significantly different, and understanding cash flow plays a critical role in the success or failure of a business. Unfortunately, many small business owners lack the expertise and time to perform a proper analysis and often find themselves cash-strapped and floundering. As professionals, our team at Chandler & Knowles CPAs has the expertise and skill sets necessary to provide quality cash flow services and assist business owners with creating a healthy cash flow to help their business grow and thrive.

Cash Flow Basics

In its simplest terms, cash flow is the money that moves into and out of your business; it can be either positive (more coming in than going out) or negative (more leaving than entering). Specifically, it is the actual cash you have available to meet payroll, purchase inventory, pay bills, and to pursue goals related to your business. The greatest impact on cash flow comes when a slow or delayed influx of revenue from payables interferes with an owner meeting financial obligations.

Components of Cash Flow and Budgeting Analysis

When working with clients on their cash flow accounting processes, we start with looking at how much cash you have on hand at the moment, and predicting where it will be at given intervals. Performing a quality budgeting analysis is needed to determine if your projected and actual expenditures match. If this analysis reveals a budgetary variance, especially if it has a negative impact on revenues, corrective measures need to be taken.

Your cash flow analysis is conducted on a monthly, weekly, and quarterly basis and is done by examining the different factors of your business, including:

  • Accounts receivable
  • Accounts payable
  • Assets
  • Asset depreciation
  • Inventory
  • Debt – short and long term
  • Net income
  • Net cash balance

Besides being able to meet immediate obligations, a positive cash flow puts you in a better position as the business grows and the time comes to expand or to branch into new areas.

Reversing the Negative Cash Flow Stream

When cash flow is negative, problems exist and your business is in jeopardy, and increasing sales is not always the answer, especially if the funds to pay your suppliers or vendors are lacking. Fortunately, these problems can be corrected with some adjustments and proper planning. Improvements can come from changing dates on a billing cycle, offering incentives for early payment, working with vendors to adjust payment schedules, and other approaches.

How We Can Help

Chandler & Knowles CPAs offers quality cash flow consulting and works with your business to track cash flow, making sure the funds you need are available at any given time in order to serve the best interests of your business. In addition, we can help you find ways to improve your cash flow, and profitability, by examining payment patterns from your receivables, showing you the best options for meeting your payable obligations, and anticipating any problems that would interfere with your goals.

Contact Chandler & Knowles CPAs Today

To learn more about receiving our quality analysis services, and learn what Chandler & Knowles CPAs can do for your business, contact us today at 817-430-3000, or fill out our contact form to schedule your appointment at our office location in Flower Mound.

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"I recommend Chandler & Knowles CPA's without hesitation, and we look forward to working with Rochelle, Kristy and the rest of the C&K staff for another 7 years and beyond!"

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