Managing cash flow for small business.

What is Key When Managing Cash Flow for Small Business on a Project and Account for Various Costs and Expenses?

Posted April 18th, 2024

Cash flow is not hard to manage once you are aware of what information you need to track.  First and foremost, you need to know what the costs are.  Make a list of everything needed for your project. This will include expenses such as materials, travel, labor, tools, etc. Managing cash flow for small business starts here.

Second, you need to model the project out to see how you will be spending the project-related costs according to the schedule you plan to maintain.  Stress test the model to see what happens if the schedule gets pushed faster or the project gets delayed.  What if the payments you are expecting in 30 days take more like 45 – does that blow up the project for you?  Do you have the right terms with your suppliers?  Should you use your contract labor or direct labor?  Is it more important for me to have the right payment terms with the vendors I choose, or should I be more concerned about the price I pay them?

A Project Cash Flow model is another key tool to managing cash flow for small business and will help answer all these questions for you. Make sure you know how much money you need to execute the project as planned and earn the profit you expect to make when you bid on the project.  For an easy-to-use cash flow tool and calculator to accomplish everything discussed in this article, check out our MF online Cash Flow Tool here.

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