So where’s the cash flow?

Last fall, I completed a charity walk that involved three days of walking to accumulate 50 miles. That walk taught me two things – you can do anything you set out to do, and introspection can be a good thing.

One of the things that I thought about on that walk was that there are a lot of very brave people in the world. We are all working toward causes that we believe in, whether they be family efforts, a struggling business, or personal gain.

One of the most common questions that I’m hearing right now in my practice is, “Where’s the money going?” This is a great question. We all see what is happening in the United States and in the world. But we are also seeing this in our own company and personal pocketbooks.

To understand where the money is going, we need to look at where we’ve been and then guide a path to where we want to go based on the current situation. As an example, if you are a business, you should be very familiar with the past. You can take your financial statements and look at the years side by side, analyzing the positive and negative variances. You can then use that information to create your budgets going forward.

Now you can compare your current budgets to your current activities. Are you ahead of where you wanted to be? Are you behind? What can you do to increase the bottom line? If you have already cut expenses as much as they can be cut, think about what comes next. The answer is to never stop looking for opportunities to positively affect your bottom line.

Perhaps your product mix is poor. Is one product performing well and not another? Perhaps the sales lines you are handling are not changing fast enough for the times we live in. You can’t look at just sales or just expenses, or focus on equipment purchases or salaries. You must analyze everything, and above all look to the future.

We are in an ever-changing world, one that changes faster than we sometimes would like. The important thing is to step outside of your comfort zone at times, to look at what comes next. That will help you determine whether the shortage of cash is temporary or long-term.

Understanding the why behind your cash flow will help you make decisions for the health of your company. Then plan out the budget, not just for next year but for the next few years. Early budgeting and sticking to that budget will help you reach the goals you have set out to accomplish.

As CPAs, we are committed to education. The American Institute of Certified Public Accountants (AICPA) provides excellent free financial education and advice for everyone through a program called 360 Degrees of Financial Literacy. The program’s website has many tools for small business owners, families, tweens and teens, veterans, those in financial crisis, and more. I strongly recommend visiting the 360 Degrees website to check out some of the wonderful tools they have on saving, budgeting, life-stage calculators and retirement planning.

The 360Degree website is at

Here’s a link to the page specifically for tools:

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