
{"id":18041,"date":"2022-08-08T13:42:01","date_gmt":"2022-08-08T13:42:01","guid":{"rendered":"https:\/\/liquidcapitalcorp.com\/?p=18041"},"modified":"2022-11-08T19:55:00","modified_gmt":"2022-11-08T19:55:00","slug":"quickly-identify-and-correct-financial-missteps-with-a-cash-flow-audit","status":"publish","type":"post","link":"https:\/\/liquidcapitalcorp.com\/es\/blog\/quickly-identify-and-correct-financial-missteps-with-a-cash-flow-audit\/","title":{"rendered":"Quickly identify and correct financial missteps with a cash flow audit"},"content":{"rendered":"<p><em>Conducting a cash flow audit can help you spot areas of weakness in your business so you can correct any issues before they become a bigger problem. It can also highlight areas of opportunity for growth.<\/em><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-18042 size-large\" src=\"https:\/\/liquidcapitalcorp.com\/wp-content\/uploads\/2022\/08\/cash-flow-audit-1030x687.jpeg\" alt=\"conducting a cash flow audit\" width=\"1030\" height=\"687\" srcset=\"https:\/\/liquidcapitalcorp.com\/wp-content\/uploads\/2022\/08\/cash-flow-audit-1030x687.jpeg 1030w, https:\/\/liquidcapitalcorp.com\/wp-content\/uploads\/2022\/08\/cash-flow-audit-300x200.jpeg 300w, https:\/\/liquidcapitalcorp.com\/wp-content\/uploads\/2022\/08\/cash-flow-audit-768x512.jpeg 768w, https:\/\/liquidcapitalcorp.com\/wp-content\/uploads\/2022\/08\/cash-flow-audit-1536x1024.jpeg 1536w, https:\/\/liquidcapitalcorp.com\/wp-content\/uploads\/2022\/08\/cash-flow-audit-2048x1365.jpeg 2048w, https:\/\/liquidcapitalcorp.com\/wp-content\/uploads\/2022\/08\/cash-flow-audit-1500x1000.jpeg 1500w, https:\/\/liquidcapitalcorp.com\/wp-content\/uploads\/2022\/08\/cash-flow-audit-705x470.jpeg 705w\" sizes=\"auto, (max-width: 1030px) 100vw, 1030px\" \/><\/p>\n<p><span style=\"font-weight: 400;\">In nearly every aspect of running a business \u2014 whether marketing, sales or finance \u2014 knowledge is power. Knowing the ins and outs of your company\u2019s cash flow is one of the keys to success, particularly for entrepreneurs and small business owners. So, too, is a regular review and assessment of the state of your finances. This ensures you will have enough working capital to pay your staff, keep up with operating expenses and grow your business when opportunities arise.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A cash flow audit or cash flow analysis is an invaluable tool for taking a closer look at your business\u2019s working capital over a certain period. The result gives you a bird\u2019s eye view of areas of opportunity and weakness. It will help you take all inflows and outflows into account to ensure you have a clear sense if your company is meeting its goals or if it\u2019s time to find new solutions.<\/span><\/p>\n<p><b>To conduct a cash flow audit, follow these steps:<\/b><b><\/b><\/p>\n<h2><b>1. Start with your cash flow budget<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Ideally, you\u2019ll have a<\/span> <a href=\"https:\/\/liquidcapitalcorp.com\/blog\/accelerate-your-cash-cycle-with-smart-cash-flow-management-tips\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">cash flow budget<\/span><\/a><span style=\"font-weight: 400;\"> in place, but if not,<\/span> <a href=\"https:\/\/liquidcapitalcorp.com\/blog\/cash-flow-2\/7-steps-to-create-your-cash-flow-budget\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">here are a few tips<\/span><\/a><span style=\"font-weight: 400;\"> for creating one.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Once this is created, review your forecasts. Look for months where you may have fallen short in the past, and analyze potential for the same to happen in the future. If you\u2019ve reviewed this in the past, now is the time to take a deeper dive to see what\u2019s going on.<\/span><\/p>\n<blockquote><p><i><span style=\"font-weight: 400;\">If your business buys or sells inventory on account, you\u2019ll also want to calculate your <\/span><\/i><a href=\"https:\/\/liquidcapitalcorp.com\/cash-cycle-guide\/\" target=\"_blank\" rel=\"noopener\"><i><span style=\"font-weight: 400;\">cash conversion cycle<\/span><\/i><\/a><i><span style=\"font-weight: 400;\"> (CCC), which measures how long it takes to convert that inventory into cash. The variables impacting the length of your CCC \u2014 such as days payable outstanding \u2014 can hurt your cash flow.<\/span><\/i><\/p><\/blockquote>\n<p>&nbsp;<\/p>\n<h2><b>2. Gather your information<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">You\u2019ll need data to conduct a cash flow analysis that delivers valuable information about the state of your business.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">First and foremost, look at your <\/span><b>income statement <\/b><span style=\"font-weight: 400;\">\u2013 which will<\/span> <a href=\"https:\/\/corporatefinanceinstitute.com\/resources\/knowledge\/accounting\/three-financial-statements\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">set out your company\u2019s performance<\/span><\/a><span style=\"font-weight: 400;\">, including your sales revenue minus the cost of goods sold and other expenses. The income statement shows your bottom line (or net income) for the period.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Next, and perhaps most importantly, <\/span><a href=\"https:\/\/online.hbs.edu\/blog\/post\/how-to-prepare-a-cash-flow-statement\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">as Harvard Business School explains<\/span><\/a><span style=\"font-weight: 400;\">, you\u2019ll need a cash flow statement to give you a clear picture of how your business received and spent cash during a specific period. The cash flow statement takes the net income from the income statement and adjusts it to include cash flow from your operations. This includes your accounts receivable and payable, and cash flow from investing and financing activities, to show you how your cash and cash equivalents have changed over a specific period.<\/span><\/p>\n<blockquote><p><i><span style=\"font-weight: 400;\">If applicable, seek out the help of your accountant or bookkeeper to streamline the cash flow auditing process \u2014 some <\/span><\/i><a href=\"https:\/\/quickbooks.intuit.com\/r\/growing-complex-businesses\/what-cash-flow-analysis-can-reveal\/\" target=\"_blank\" rel=\"noopener\"><i><span style=\"font-weight: 400;\">accounting software programs<\/span><\/i><\/a><i><span style=\"font-weight: 400;\"> and tools will also be able to provide you with your cash flow statement within a specified period. Rather than waiting until tax time or until problems arise, <\/span><\/i><a href=\"https:\/\/liquidcapitalcorp.com\/blog\/7-small-business-bookkeeping-tips-for-time-pressed-business-owners\/\" target=\"_blank\" rel=\"noopener\"><i><span style=\"font-weight: 400;\">reconcile your accounts monthly<\/span><\/i><\/a><i><span style=\"font-weight: 400;\"> so that you are able to address any discrepancies quickly.<\/span><\/i><\/p><\/blockquote>\n<p>&nbsp;<\/p>\n<h2><b>3. Analyze your data<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Once you have these numbers, you\u2019ll be able to see specific areas where your business is experiencing <a href=\"https:\/\/liquidcapitalcorp.com\/blog\/factoring\/need-unlimited-cash-flow-funding-invoice-factoring-can-help\/\" target=\"_blank\" rel=\"noopener\">cash flow shortfalls<\/a>. Perhaps you have more outstanding accounts receivables than you thought, for example. Ultimately you will be able to identify exactly where you are experiencing leaks in your cash flow pipeline.<\/span><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"size-large wp-image-18045 aligncenter\" src=\"https:\/\/liquidcapitalcorp.com\/wp-content\/uploads\/2022\/08\/cash-flow-audit-1030x687.jpg\" alt=\"cash flow audit\" width=\"1030\" height=\"687\" srcset=\"https:\/\/liquidcapitalcorp.com\/wp-content\/uploads\/2022\/08\/cash-flow-audit-1030x687.jpg 1030w, https:\/\/liquidcapitalcorp.com\/wp-content\/uploads\/2022\/08\/cash-flow-audit-300x200.jpg 300w, https:\/\/liquidcapitalcorp.com\/wp-content\/uploads\/2022\/08\/cash-flow-audit-768x512.jpg 768w, https:\/\/liquidcapitalcorp.com\/wp-content\/uploads\/2022\/08\/cash-flow-audit-1536x1024.jpg 1536w, https:\/\/liquidcapitalcorp.com\/wp-content\/uploads\/2022\/08\/cash-flow-audit-2048x1365.jpg 2048w, https:\/\/liquidcapitalcorp.com\/wp-content\/uploads\/2022\/08\/cash-flow-audit-1500x1000.jpg 1500w, https:\/\/liquidcapitalcorp.com\/wp-content\/uploads\/2022\/08\/cash-flow-audit-705x470.jpg 705w\" sizes=\"auto, (max-width: 1030px) 100vw, 1030px\" \/><\/p>\n<h2><b>4. Take action and prepare for the future<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">With your newfound information in front of you, you can better align your cash flow and business processes with your goals.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For example, if your cash flow audit identified a noticeable gap in working capital, specifically, a large number of outstanding invoices with credit-worthy customers, <a href=\"https:\/\/liquidcapitalcorp.com\/funding-solutions\/invoice-factoring\/\" target=\"_blank\" rel=\"noopener\">invoice factoring<\/a> may be the ideal solution to turn your near-term assets, or invoices, into cash.<\/span><b><\/b><\/p>\n<h2>Address any cash flow obstacles<\/h2>\n<p><span style=\"font-weight: 400;\">With alternative funding options from Liquid Capital, you\u2019ll be able to quickly address any shortcomings in your cash cycle. You\u2019ll be working with a Liquid Capital Principal who is a business owner like yourself, so they understand the challenges and opportunities you face daily.<\/span><\/p>\n<hr \/>\n<h2><b>Want to learn more? <\/b><a href=\"https:\/\/liquidcapitalcorp.com\/principal-finder\/\"><b>Contact your Liquid Capital Principal today<\/b><\/a><b>.<\/b><\/h2>\n","protected":false},"excerpt":{"rendered":"<p>Conducting a cash flow audit can help you spot areas of weakness in your business so you can correct any issues before they become a bigger problem. It can also highlight areas of opportunity for growth. In nearly every aspect of running a business \u2014 whether marketing, sales or finance \u2014 knowledge is power. Knowing [&hellip;]<\/p>\n","protected":false},"author":146,"featured_media":18048,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[181,216,188,182,186,178,175],"class_list":["post-18041","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","tag-alternative-financing","tag-business-challenges","tag-business-funding","tag-business-growth","tag-business-strategy","tag-cash-flow","tag-invoice-factoring"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Quickly identify and correct financial missteps with a cash flow audit<\/title>\n<meta name=\"description\" content=\"Conducting a cash flow audit can help you spot areas of weakness and opportunities for future growth. 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