Generate cash flow diagram
Charts help people to visualize information. A cash flow chart clarifies what your company does with its money in a way that may not be apparent when you look at a spreadsheet page full of numbers.
This understanding can help you to make better-informed strategic decisions as well as streamline your internal operations.
Design a rough draft of your chart before making a large-scale version. Take a sheet of paper and draw a box at the top for each form of income your company earns. Common sources of income include sales to consumers and payments from clients. Other sources may include government tax credits, leasing fees, licensing fees, asset sales and equity.
Draw boxes in the middle of the page for each segment of the company that has spending authority. In larger businesses these consist of departments or divisions, usually headed by a vice president who must authorize expenditures. The key point is to identify all the different ways in which your company is structured to spend money. Again, make sure you do not overlook anything.
Under each spending authority box, draw smaller boxes identifying specific areas of expenditure. For instance, under the facilities management box, list separate boxes for utilities, repairs and groundskeeping.
Next to each box, list the amount spent in the most recent accounting period. Add them all up and write the total next to the spending authority box. Double-check the accuracy of all figures, and do not overlook any expense.
Cash Flow Diagrams
Make sure every penny fits somewhere. The key here is to see how your company spends money and how much it spends.
Connect each income box at the top of the page to any spending authority box that draws its budget from that source of income. You may want to use different-colored markers for this to help avoid a confusing mess of lines. If your company collects all income into a general account first and then budgets all spending from that account, then you can skip this step. Simply draw a single box between the income boxes and spending boxes and mark it as your general budget.
In practice, however, certain forms of income often go directly to certain expenses. Review the chart, check it over for errors, and think about how you can improve the visual design to highlight the information on the page. Then draw a much larger final version of the chart, using markers on a big piece of paper suitable for presenting at meetings or mounting on the wall. Use differently shaped boxes for each type of box to further distinguish the information.
Josh Fredman is a freelance pen-for-hire and Web developer living in Seattle. He attended the University of Washington, studying engineering, and worked in logistics, health care and newspapers before deciding to go to work for himself. Skip to main content.
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Things Needed Company financial records Paper, pencils, markers. Tip You can make different types of flow charts.
Another commonly used form of chart focuses on the process of income and expenditure, using a horizontal timeline with positive upward income values and negative downward expense values to denote literal cash flow. You can superimpose the company's balance sheet using another color behind the main figures to show how each income and expense affects the balance. References 2 Mind Tools: Flow Charts The Engineering Toolbox: About the Author Josh Fredman is a freelance pen-for-hire and Web developer living in Seattle.
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