A business must track the inflow and outflow of cash to determine how and where the money is going. This cash flow refers to the cash a company generates and spends to operate accordingly. For successful cash flow management, a company must know how to monitor this flow of money.
If you are a small business owner looking to understand how to track this cash flow, follow the steps below to implement in your company.
Tracking Cash Flow Step-by-Step
Tracking cash flow means monitoring and managing the cash inflow and cash outflow of a business. Money comes into the company through sales and revenue, and interest made on savings but leaves the business when paying for expenses and other operating costs.
Knowing what’s coming into and out of the accounts is part of this monitoring of finances. To track cash flow through a business, as the owner, you will first need to collect all your company’s transaction history and financial information.
- Gather all expense receipts and source documents and sort all payments made for operating expenses of a business
- Record and track all sales revenue and other income generated from investments
- Consistently and systematically update this information daily or weekly into a cash flow spreadsheet
- Generate a cash flow statement for a clear overview of the cash coming in and out of the business
Manual vs Automatic Tracking
Collecting, sorting, and recording all of this financial information by hand is known as manual cash flow tracking. Small businesses can choose to track and monitor cash flow manually, using Excel Spreadsheets or Google documents. You’ll need to make your own calculations when tracking cash flow manually. You can use various cash flow formulas to determine net cash flow, operating cash flow, and free cash flow.
For many businesses, manual tracking is not an option. They do not have the time, human resources, or expertise to monitor their finances by hand. Instead, companies turn to financial software and applications to automatically track their finances.
Automatic cash flow tracking uses software and applications to track and chart the cash inflow and cash outflow of a business by syncing all bank information and business accounts.
Tracking in Excel
Excel spreadsheets and Google documents and sheets are the go-to manual method of tracking business cash flow. When using spreadsheets, you will need to enter all information manually – past, present, and future- for monitoring purposes.
To get started with manual tracking, you will need to have your business’s income statement and balance sheet from last year. Use this information to populate a cash flow statement. This cash flow statement is the record of the money travelling through your business and the changes in your cash on hand. You can use this cash flow statement and template to help create one for your business. Once created, the analysis of cash flow statements can help your business determine how to best use cash on hand for optimal output.
However, manually recording cash flow typically means that by the time you can view and use the information you have input, it is already out of date and irrelevant to your current cash flow state. Many larger companies turn to software as it offers automatic tracking and up-to-date information without human error when managing cash flow.
With numerous apps for tracking cash flow found online, there are so many to choose from; how do you know which one will work best for your business?
Best Apps for Tracking Cash Flow
When it comes to finding the best money tracking apps, you will want to ensure your business settles on one that will work with your current system. Using such apps can help your company improve its cash flow management. Monitoring your money can turn negative cash flow into positive cash flow as you improve your business processes.
Here are some of the most popular apps for tracking cash flow in a business and the features that make them so great:
QuickBooks Online offers small to medium-sized businesses more than just a cash flow tracking system. This platform provides a whole set of accounting and bookkeeping services to aid your company in day-to-day operations and long-term financial monitoring and record keeping.
Track cash outflow, such as operating expenses required to run a business with expense tracking, and track cash inflow through accounts receivable and invoice tracking. Generate cash flow statements, cash flow analysis, income statements, balance sheets, and profit and loss statements. QuickBooks Online even offers cash flow planning and projections, letting you play out financial scenarios to determine the impact that future cash flow problems might have on your business.
Smansha offers its users many excellent features for managing cash flow, including an interactive cash flow forecasting and a loan and financing comparison tool, all with an intuitive interface. Cash flow analysis is easy when you use this app to identify and correct short-term cash flow issues.
Smansha seamlessly connects with QuickBooks Online software so businesses can have all of their financial needs covered. It automatically tracks all transactions and expenses, along with the predicted due dates of invoices and bills. If you would like to try out this app before purchasing it for your company, they offer a free trial to make it easy to start today.
As the name suggests, CashFlowTool is a tool that businesses can use to manage their cash flow. This app offers users extensive features, including a patent-pending AI technology that predicts the future of your company’s cash flow. When considering a large purchase and the impact it will have on cash outflow, the software lets you explore scenarios to measure and understand how these decisions affect your business.
This app lets your small business collaborate with team members, create a cash flow calendar to schedule and monitor what is coming into and leaving your accounts, and receive automatic updates and alerts when the CashFlowTool detects unexpected bills.
It’s easy to start with CashFlowTool, as there is no need for data entry to start. Seamlessly connect with your business’s accounting software, like QuickBooks Online, to sync your data and get started instantly.
Businest can sync directly to QuickBooks, offering users an intuitive interface and navigation system to help track business cash flow on PCs, Macs, and most smartphone devices. Customer support and step-by-step guides can walk you through any issues that arise from the program. This app offers companies a wide range of cash flow features, including cash flow projections and management tips.
With four plans to choose from, including a free option, your business can find one that works for your needs. Opt for the standard package and receive auto uploading of financial data, cash flow analysis, cash flow forecasting, how-to videos, and insightful tips on managing and improving cash flow.
Float cash flow tracking app that offers businesses a real-time view of their finances. With up-to-date information at your fingertips, this app lets you run in-depth scenarios to plan how best to manage and use the company’s cash flow. It even syncs with other financial software to provide a comprehensive toolkit for your finances.
The Float app can help businesses with the creation and analysis of cash flow statement and forecasting. It allows you to set multiple budgets for your cash and tracks expenses against those budgets, so you know exactly where your money is going. Float even imports invoicing and billing for projects and lets you see what’s outstanding so you can collect your accounts receivable and improve cash flow.
Consider Cash Flow Software for Your Small Business
When tracking and managing cash flow, small businesses should take advantage of the current software on the market today. Automating your business cash flow tracking and recording can save you time, money, and effort, for improved, positive cash flow!
Track cash inflow and cash outflow easily with the right applications and software like QuickBooks Online. This accounting software syncs with hundreds of financial apps, so your business can keep all its information in one place for accurate tracking and reporting. Improve your cash flow management and upload your account information seamlessly and start tracking your cash flow today!