Your 7-Step End-of-Year Cash Flow Checklist

Author: Caron Beesley | December 9, 2016

Because cash flow is the lifeblood of any business, it should be under constant review and optimization. Never is this truer than as the year comes to a close. Staying on top of cash projections, cash movement, and your sources of cash is essential to avoid cash shortfalls. Here are seven year-end steps you should take to review your cash flow situation and plan for a cash flow positive 2017.

Review Your Cash Flow Statements

Your cash flow statement is a documented history of when cash enters (as receipts of capital) and exits (bill payments, debt obligations, payroll, etc.) your business. It should ideally be maintained monthly and can be used to assess your current cash position. At year-end, however, spend some time reviewing statements for the prior 12 months for a useful insight into cash flow trends. These can inform both your cash flow forecast for the next 3–6 months and any steps you should take to mitigate recurring pitfalls (such as perpetually late-paying clients).

Create a Cash Flow Forecast Schedule

Map out a plan to create and revisit your cash flow forecasts. At a minimum, forecasts should be created for a 90-day period, but can extend to 6–12 months. Make a point of revisiting your projections often and adjust your budget or business planning and operations if cash flow is projected to be tight at any point during the year.

Correct Any Cash Flow Problems Before the Year’s Up

This will vary from business to business. For example, if you’re dealing with a stack of unpaid invoices, chase them with the goal of closing them out before the year ends. If you struggle because clients pay you on net 30, 60, or 90 day terms, find an alternative source of cash, such as invoice financing, a line of credit, or a new sales strategy.

Review Your Pricing Strategy

Raising prices can help improve cash flow, and even a small raise across your customer base helps. Just make sure to  do prepare and pitch. Assess how much of a rise the market will tolerate and be sure to communicate how you or your product/service delivers value. Read more in 4 Signs That It’s Time to Raise Your Prices and 3 Ways to Do It.

Create Sales Projections

Approach the new year with a methodical approach to setting sales targets—weekly, monthly, or quarterly. As fellow Fundbox blogger, Rieva Lesonsky, explains:

Projecting future sales over a specific time period enables you to plan better for all elements of your business, from ordering inventory and budgeting for marketing expenses to hiring new employees and obtaining necessary financing.”

Read more in Rieva’s blog: How Creating Sales Projections Can Help Your Small Business.

Keep Working to Improve Collections

64% of small businesses regularly deal with late-paying clients, with nearly 50% of net 30 invoices being paid late. One of the most effective ways to deal with this is to review your entire collections process: the way you invoice, how frequently, and who you put in charge of collections. Find out where the bottlenecks are. If you’re a service-based business, consider offering online payment options. According to Harvest, businesses who offer online payment options get paid nearly 16 days sooner (twice as fast).

Plan Your Capital Needs

Whether you plan to grow your business next year or need a back-up funding source, start planning now to prevent a cash flow crunch. Business loans require preparation (a business plan, at the minimum), strong credit (start building and monitoring yours now), and solid financials (prepare and maintain your P&L statement, cash flow forecasts, and balance sheet).

If you need cash help now, set up an account with Fundbox and to advance payments on your invoices, when you need it, for a small fee. You can use the funds for whatever you need, then repay over a 12-week or 24-week repayment term.

Ready for more?

Apply for funding and find out if you qualify today