To effectively manage cash flow, you must work it in advance.  It can’t be done strictly as a day-to-day reaction to what has already happened.  Business leaders need to know what is likely to happen before it happens; if not, they may inadvertently steer the organization into financial crisis. 

Because the circumstances inside and outside your organization are dynamic, your process for managing cash must also be dynamic.  Most large organizations know this and have systems in place to stay on top of cash flow, but many small businesses and social sector organizations have not taken the time to do the same.  It’s really quite simple to do, requiring little more than a simple spreadsheet and 1-2 hours of time each week.  With this, you can have a rolling 3-4 week cash flow forecast, which provides the owner and management team with the visibility necessary to make informed decisions.  This forecast should then be worked into a quarterly and annual cash flow forecast.