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How to evaluate profits and cashflows
Ryan Chen
January 15, 2025
Hi there,
Welcome to Loancater’s weekly newsletter. This is approximately a 4-minute read.
In today's newsletter, we’re going to go over how to predict your future cash flow using a systematic method
We are going to go over…
Actionable Tips
Most business owners take last minute loans because they don’t have a 3 months cash reserve available to them at all times. (At Loancater we always keep 4 months of cash reserves.)
And that’s because they’re unaware of where their capital they are making is going and being used.
Switch over to accrual accounting to get a high level view of your business and cull the fat from costs you don’t need.
Why you need to switch over to accrual accounting for your P&L and BS (link)
With Accrual accounting you track new profit and expense on your P&L and BS as inflow/outflow comes in and not when cash changes hands. That means at the point of sale or purchase using your company you mark the expenditure/income. By doing this you're able to start keenly ahead of cost buildup and avoid a situation where you're short on cash or your business being unprofitable because you can easily cut out what is unnecessary.
How to use this spreadsheet to calculate future cash flow (link)
This spread sheet allows you to place your incoming ARs as well as your outgoing expense in a projection format. Take 30 minutes a week to see where your company stands with the spreadsheet
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