I encourage businesses to keep a cash flow budget, regardless of their financial circumstances, as a decision-making tool. When times get tough, having a cash flow budget can spell the difference between the continuation of the business and the end of the business. It’s still a decision-making tool, but in difficult times, it’s a tool to help you spread thin resources to the best use. For instance, during the current COVID-19 crisis, I have clients asking me: Do I lay employees off? Which SBA loan to I apply for? Do I qualify for help with health insurance? Can I get additional financial aid for my child’s college costs? All of these questions can be answered with a cash flow budget. As an additional benefit, the cash flow budget, along with good business reporting, shows the SBA, the health insurance exchange and your child’s college, that you need their financial assistance. What is a cash flow budget? A cash flow budget starts with the revenue and expenses for your business, adjusts for any debt payments or owner payments, and then applies this amount to beginning cash, to arrive at ending cash. You can keep this budget on a monthly, quarterly or annual basis. My preference is to budget annually, with a monthly cash flow that is updated as the year progresses. I recommend creating your budget for the following year in July or August and updating it as needed, through December. This allows you to always have at least 10 months of progressive cash flow information, giving advance warning of any cash flow issues. Once you have this advance warning, you can apply for credit or adjust operations, as the situation warrants, before you run out of cash and have to cease operations.