The Running Total: Segmenting the Direction of the Cash Flow

by CCB Today | Tuesday, Aug 30, 2016 | 299 views

Cash flow diagramContrary to popular understanding, cash flow management and utilisation isn’t just for large business chains and corporations.

Accounting North Ltd suggests that if an individual or a small business applies the principles of cash flow effectively, it’s easier to see where the money is currently at, and where it’s going.

A well-executed cash flow system will enable its user to conveniently do the following:

  • Set a zero-sum projection of the sales they can make in a certain period
  • Set a flexible and workable expenditure calculation within the construct of the deplorable budget
  • See when the cash or funding will be available in the bank for better allocation of capital and investments

These quick turnaround key cash flow features are just the start of the many purposeful benefits of integrating an accounting management strategy.


It’s favourably fluid to set up a cash flow forecast protocol in place, but making it functional and effective to the business organisation is different. Before the actual run of any financial management initiative, a deep rundown of all the sales, costs and cash transactions should be meticulously observed. The more exact and accurate the accounting is, the better cash flow rendering result can be expected.

Steps to Cast a Projection

To build a working cash flow, it’s better to segment the forecasted phases: sales, profits and loss, and the cash flow itself. An example outline follows:

  1. Sales Forecast
  2. Profits and Loss Forecast
  3. Cash Flow Forecast
Read this article:  The Supply of Rechargeable Battery Elements are in Trouble

The sales forecast pertains to the gross profit of the business in a given sales season, while the profits and loss forecast derives the total net profit. The creation of the cash flow forecast ultimately depends on how the prior projections are calculated.

The execution of a cash flow management system isn’t just about determining the money trails. When used effectively, it’s also a metric for organisational growth and development.

Like it? Share it!