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Managing cash flow is critical to keeping your doors open. Much like the blood that courses through your body, cash flows through every area of your organization, nurturing its growth and preventing problems.

To keep your business healthy — and to get sufficient early warning when it’s not — here are some suggestions for monitoring its cash flow.

Project the Cash Receipts Due

The conventional monitoring of receivables tells you how much cash is due to you, and “aging” those receivables helps you make an educated guess about when some of it will come in. But you can manage your incoming cash better than that.

Look back at the remittance habits of your sources of cash and calculate when each one is likely to send the next payment. This allows you to build a cash flow forecast that helps you better manage your company in four different ways:

1. It lets you more accurately anticipate payments before they arrive.
2. It lets you plan in more detail how you’ll use each payment when it comes.
3. It lets you recognize sooner when a payment is late, so you can begin taking steps immediately to bring in that revenue.
4. It helps you recognize weekly, monthly, and seasonal cash flow patterns, so you can take advantage of increases and compensate for shortfalls before they harm your business.

Anticipate Your Cash Requirements

Tracking your payables — including payroll, fixed costs, and other anticipated spending — specifies your overall bill-paying obligations. But tracking and managing the date that you must make each of these payments will give you very definite targets for accumulating specific amounts of cash. These targets are helpful to small-business owners because:

1. They help you recognize the same kind of weekly, monthly, and seasonal cash patterns you may see in your receivables.
2. They let you recognize sooner when you’re falling short, so you’ll have more time to find sensible ways to compensate.
3. They let you make use of extra cash on hand and prepare for larger than normal payment obligations.