Like any other business in the world, you wouldn’t be able to survive in an eCommerce business without cash. A bad cash situation is a similar indicator as if any other part of your business were having problems. It generally shows a lack of monitoring and control.
You know the saying:
“You can’t manage what you don’t monitor”.
What I am about to show you is a Cash Flow worksheet that is designed to help you gain clarity of your cash position accurately and very fast. It’s as simple as entering information on the worksheet manually once a day since the cash flow information required is not complex. Just a couple of simple numbers to gather.
How to Set-up a Cash-flow Worksheet
Before we get started, I will describe to you how to set up a cash flow worksheet that takes only a few minutes a day to monitor, but if you want a quick start, I have created a template for you in Excel. If you want to start with the template, click on the button below and have it delivered straight to your inbox:
Here’s a screenshot of my template so you can see what the end result looks like:
The Profit First row is based on a great book of the same name. The taxes row is part of the book too. It’s based on the adage of Parkinsons Law:
“Work expands so as to fill the time available for its completion”
except with a twist:
“Expenses expand to fill the cash available to use”
It’s the simple idea of Pay yourself first but the book also adds a few ways you may like to implement the approach.
You can check out the book here: https://profitfirstbook.com/
How does the Cash flow Worksheet Work?
As you can see, the worksheet outlines the expense, income, cash, and balance for a week. The income sources include the daily sales from the business and any other sources of income like wholesale payments. In the expense category, you track things like taxes, payroll, utilities, and 401k/Super.
The best way to work with the sheet is to add the sales incurred daily up to the day when the money clears up in the bank, for instance, the sales for Monday should be entered in the worksheet on Wednesday because this is when the cash will clear into your bank account. Then you can add or check expenses every week to monitor how they stack up compared to how much cash you have on hand.
You now have a daily running total of cash available that you can help to use make decisions like if to up a marketing campaign that’s working well
Steps to set up your spreadsheet
- Create a new worksheet in Excel (or your fav app)
- Add a column for the headings as in the screenshot
- Add a column for starting balance and percentages in expenses
- Add a column for each week, you can start with just the next few weeks and add a new one each week as you move forward
- Add the subtotals for each week’s income and expenses
- Add the formula for each week’s Profit First and Tax allocations. Do this by multiplying the percentage by the total income of the week
- Add the dates and the balance formula. The formula is simply the previous week’s balance, plus the week’s income minus the week’s expenses
- Enter your current cash position for last week
- Enter your expenses for the week. you can add any recurring expenses on the day they fall in advance.
- Then each day, add the previous day’s total sales to the day the cash will be available to you. So if you sell $100 on Monday and it cleared into your account on Wednesday, enter $100 on Wednesday. This is the easiest way to manage cash from sales
Why Create a Weekly Worksheet?
In any eCommerce business, you need a way to track cash flow to help you make better decisions and respond to certain events. By tracking your cash, you can decide if you want to expand a marketing campaign to let it run because you can afford it or if you need to do something to drive sales because in two weeks you have a big expense coming.
The Weekly Cash Flow Worksheet helps you to manage the dynamics of your cash flow throughout the week. You can very quickly anticipate money shortages and make necessary changes. And with the Profit First approach, you can get more profit allocated quicker, helping you stay motivated in your business.
A cash flow worksheet is a necessary tool for any business seeking significant profits. Designing the worksheet is simple, and its management is easy. It reduces chances of bankruptcy since the business owner monitors income, expenses, and cash position on the worksheet. Additionally, the cash flow worksheet prevents possible cash shortages incurred during transactions.
Don’t forget to download the template to give you a quick start by clicking the button below: