Use QuickBooks to Track Cash Flow and Identify Leaks to Plug Up

QuickBooks is one of the most widely-used accounting programs in the world, and for good reason. This powerful program is easy to use for even first-time business owners with few accounting skills. It provides some very dynamic tools and reports that can help you make data driven decisions for your business. Companies large and small rely on QuickBooks for a wide range of accounting tasks. Knowing how to correctly analyze a cash flow statement can help owners and managers track where their money is going down to the last cent. This careful tracking will help prevent misuse of funds at any level.

Taking a Close Look at Cash Flow

Cash flow consists of three distinct portions that, when combined, demonstrate the financial activity taking place inside an organization. These portions are:

• Costs associated with operation


• Investments made in assets


• Applicable financing

These three figures added together demonstrate your business’s cash flow. Each portion of this economic equation represents different financial facets of your organization.

The Cost of Doing Business

Operational cost is the figure representing your daily earning and spending. Any cash that came in to the operation during the period being examined is included, along with payments made on accounts. From this amount are deducted regular operating expenses, such as rent or utilities. You will then have a pretty basic idea of how your business is doing, financially speaking.

Investing in Company Assets

An asset-related investment is money spent on property, equipment, vehicles, and other long-term capital assets; this can also include investment securities. These investments will often help create robust financial health in your business. Ideally, income generated through business operations should cover this entire cost. Timing of these purchases is crucial as you don’t want to leave yourself short covering monthly expenses.

Investors and Lenders

Finally, any business-related financing is included in your cash-flow calculations. For instance, money paid to or from investors would be part of this figure, as would money paid or obtained through a business loan. Often, these costs are left off of many cash flow calculations and business owners may find themselves scrambling to cover some needed operating costs without realizing the shortfall is due to this mis-calculation.

Generating an Accurate Cash Flow Calculation

Misused funds are much easier to detect when rigorous bookkeeping is practiced. Professional accounting services can help you identify the operations that need to be included in your reporting. Business owners with a close understanding of cash flow reporting can even identify which financial functions are related to missing funds. This can raise the standard of accountability within any organization. You can invite a QuickBooks expert to analyze cash flow for you or even task these QuickBooks accounting services in Bucks County to handle your monthly P&L reporting on a regular basis while you focus attention on growing your business.

Most business owners will seek out accounting help from a small business consultant with an expertise in cash flow analysis. The only question is how long will it take you?