Tracking Business Cash Flow
Revenue is not cash flow. Here is how I separate the two in a small business.
The story
A side project brought in more money one month than I expected. I treated the whole amount as available and paid a personal bill with it. The next month a supplier invoice arrived that I had forgotten. The project was still profitable on paper and short on cash. After that I started writing down money in, money out, and what was left before I moved anything to a personal account. The habit took ten minutes a week and removed most of the surprises.
Known mistakes
- Looking at revenue and calling it profit.
- Mixing business and personal spending in the same account.
- Forgetting irregular costs like annual software or insurance.
- Paying yourself before the bills for the month are covered.
- Not writing anything down because the business is βsmall.β
What I would do if I were starting over
- Open a separate account for business money, even if the business is a side hustle.
- Once a week, list money that came in and money that went out.
- Subtract the outflows from the inflows before deciding what you can pay yourself.
- Add a line for upcoming irregular costs so they do not arrive as surprises.
- Keep one month of typical expenses in the business account as a buffer.
- Review the weekly numbers once a month and ask what changed.
- Only increase personal draws after the buffer and upcoming costs are covered.
Tracking does not have to be complicated. A short weekly list is enough to see whether the business is producing cash or just activity.