Cash Flow, Small Business, Part 2

Weekly Planning
Once you have your average budget figured out (see Cash Flow, Part 1), you can begin applying it to operations on a regular basis.
Here is one system of organizing for cash flow control.
Allocate a regular time at the end of each week when you and perhaps some selected employees can plan how to spend the money that came in that week. Any employees can submit written spending requests, which will be adjudicated at this time.
Ideally, the first thing to do is to allocate a fixed percentage of the week’s income to a reserve fund.
Then, allocate payments to the following:
• Bills. If you can’t pay them all this week, pay them in the order in which they were received, or in the date order in which they are due.
• Take a look at the weekly budget. Set aside weekly amounts for bills or payments that occur monthly, such as the rent and utilities. Keep a record of amounts set aside each week, amounts spent and balances available.
• Go through the written spending and purchase requests of employees, paying attention to where (and if) they fit into the budget. Approve the ones that fit into the budget, if there is enough money this week.
• If the week’s income was more than the budgeted amount, you can use the excess to catch up on any shortages from prior weeks, or, if everything is caught up, approve additional spending requests that otherwise might not be strictly per the budget.

Even if you have no employees, it is a good idea to have a structure such as this for the control of cash flow, so that you can keep up with the bills, eliminate the unexpected need to write a check right now for something that was forgotten, to make sure there is enough money for the rent when it comes due, etc.