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Does this sound familiar?
You’re a little tight on cash or trying not to dip into your line of credit so you carefully decide which vendors to pay. Then an employee comes to you with a expense report from 2 months ago…you graciously pay it so the employee can pay his rent. Then a few days later, an automatic ACH comes out of your account…oops forgot that was coming. Next thing you know you are overdrawn.
You start realizing that you need to manage your cash better, so you start preparing a weekly cash forecast on a spreadsheet. It’s a simple spreadsheet…the weeks going across the top and primarily vendors along the left side, with amounts filled in for each vendor for the next several weeks.
It works well the first week. You start updating week 2 by deleting the week 1 column. Oops…you accidentally deleted a deposit that never made it in week 1. Oops again, you realize you split a vendor payment in half. But now you have a #REF in that cell in week 2. You have to go back and put that in again. You get back on track until week 5 when you are overdrawn again! Now what? Oh no.. You realize you accidentally overwrote the ending cash balance in week 5. It wasn’t a formula!
Next thing you know you are spending 17 hours a week making sure every formula in your cash forecast spreadsheet is perfect. As a CFO for hire, I can tell you it doesn’t have to be this way.
Here are 5 ways to improve your cash forecast:
- Integrate it with your accounting system – there is a good chance that as almost every number you are entering in the spreadsheet is already in your accounting system. Why duplicate the data entry when you can link to your accounting software?
- Never delete a column – rather have formulas that look at data on another spreadsheet tab. The data on that other tab should be expected transactions including descriptions, amounts, and expected disbursement dates
- Never delete any of those transactions, rather mark them after they happen
- Use your check register balance, not the bank balance, which will not reflect outstanding checks.
- Use our template, which can incorporate all of the above.
Click the here to get our free cash flow forecasting spreadsheet.