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New Year Cash Flow Checklist

Written by Anni-Mari van Wyk

On Jan 3, 2020

The new year is here and the time to do follow-ups and checklists is here. This is the time where you get to evaluate your business’ progress and financial position before starting afresh in 2020.

 I strongly believe that cash flow should be under constant review and modification. Staying on top of cash projections, cash movement, and your sources of cash are essential to avoid cash shortfalls- especially in the new year. Having a checklist at this time of the year also helps businesses accurately and strategically plan their financial goals. 

Here are year-end steps you should take to review your cash flow situation and plan for a cash flow positive 2020: 

1. Review Your Cash Flow and other financial statements 

This will show you the net increase or decrease in your business’s cash flow over the period of time you’re looking at and show you at a glance where the money went.

Your cash flow and other financial statements should be maintained monthly in order to assess your current cash and financial position

2. Create a Budget for the New Year

Once you’ve reviewed your financial statements, dig deeper and evaluate your expenses to eliminate any unnecessary items from your budget. If, for example, you have subscriptions or services that you’re not using and can cancel before they renew. Or, maybe the return on investment for a new marketing technique wasn’t high enough to justify continuing its use.

You can also plan ahead for how and where your money will go in the new year and try to be as close to accuracy as you can. 

3. Collect Outstanding Accounts Receivable

If any of your clients still owe you money for work done the current year, it’s time to follow up and secure payment. Collecting your money before the end of the year will help you enter the new year with a clean slate. 

Letting too much revenue sit in accounts receivable for a long time can hurt your business’s cash flow and put your livelihood at risk.

4. Correct Any Cash Flow Problems Before the Year’s Up

This will vary from business to business. For example, if you’re dealing with a lot of unpaid invoices, chase them with the goal of closing them out before the year ends. If you struggle because clients pay you on net 30, 60, or 90-day terms, find an alternative source of cash, such as invoice financing, a line of credit, or a new sales strategy.

5. Taxes

Start organizing your tax information so you’re ready to file. When you review your expenses for the year, make sure you have the necessary documentation for items that can be deducted. If your revenue was high and you have adequate cash flow, consider end-of-year purchases that can be written off, such as buying new equipment or replenishing supplies.

6. Create Sales Projections

Approach the new year with a methodical approach to setting sales targets—weekly, monthly, or quarterly. This is a great start to the new year and businesses that successfully plan and follow their projections right from the start have a better chance of having a good financial year. 

7. Arrange a meeting with your bookkeeper, accountant and/or financial advisor

Each of these will have work to do for your business at year-end. Talk to them, and make lists of tasks that they need to carry out. This will help them focus on your business at this busy time of year.

As we now all know by now; businesses that fail to plan plan to fail. Business planning is very important, but it’s easy to put off in the press of daily events. Hopefully, this year-end checklist has inspired you to get to it and made your business planning easier. 

If you’re still a bit confused about whether you’re doing your check-list right or have no idea where to start, then message me directly and start off your 2020 on a high cash flow note! info@cvwab.co.za

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