Be it computer software, plain old pen and paper, or abacus, most business owners have a way of keeping track of their cash flow. Kelly Vogan, president and owner of Vogan Associates in Silver Spring, Md., has a method that does what he says most others don't: It allows him to forecast what he'll have in his bank accounts as many as six weeks into the future. "It's very accurate four weeks out," Vogan says. "Six weeks out, it's not as good, but still OK."
"It" is a Microsoft Excel workbook that actually contains three spreadsheets, all linked together — one each for payables, receivables, and payroll. Each sheet has a list of vendors, clients, and expenses on the left and a column for each week on the right. Based on payments scheduled to be made or checks he expects to receive, Vogan enters dollar amounts in the column for the appropriate week, in the row corresponding to whom the payment is going to or coming from.
The "most critical" part of this workbook, according to Vogan, is a row of cells, highlighted in yellow, that runs all the way across the top of each sheet. This row is formatted to calculate the amount of money Vogan should have on hand in a given week, based on the payables and receivables entered in the cells below.
With relatively fixed payroll expenses and a solid idea of when he'll receive payment from clients, Vogan has a good notion of how big his bank accounts will be weeks in advance. This lets him schedule payments to suppliers and subcontractors at a time when his bank account can best handle it.