There is money in the account. But is it yours?
Your bank balance says how much is there, not how much is yours. VAT, salaries, suppliers and advance payments, and how to see what is really free in 30 days.
You open your banking app and there is a nice amount in it. Some breathing room. Until the end of the month, when salaries go out, the VAT return comes due and three supplier invoices turn out to be still open.
The balance in your account is not a lie. But it is the wrong answer to the question you are asking yourself. That question is not "how much is there?" but "how much of it is really mine?".
Why your bank balance gives the wrong picture
Your account holds money that has long been divided up. It just does not know it yet.
- VAT. The VAT your customers paid is not yours. You collect it for the government and pay it at the next return. Until then it simply sits in your account, looking like revenue.
- Salaries and social contributions. This month's salaries only leave at the end of the month. What you see on the 10th is therefore too much.
- Advance tax payments. If you pay taxes in advance, you do so at fixed moments in the year. Forget to plan for it and a large sum suddenly disappears.
- Suppliers. Invoices that have come in but are not yet due are not in your account. They are there all the same.
- Large annual costs. Holiday pay, end-of-year bonuses, insurance, an annual licence. They come every year, and every year they still come as a surprise.
On the other side there is also money still to come in: customer invoices that are still open. But that money is only yours once it has arrived. And as the due dates on your customers are wrong explains, it often comes later than the invoice says.
What is left, you only know once it is gone
That is how it works at most smaller companies. You see the balance, you feel reassured, you decide something: a purchase, an investment, an extra person. And a few weeks later it turns out the money was not really there.
Not because you calculate badly. Because nobody calculates it for you. The accountant sees it afterwards. The bank only shows what is there right now.
Really available in 30 days
The number you want to see is simple to describe: how much money will I really have free in thirty days, once everything that has to be paid is paid?
The calculation:
- Start with your bank balance today.
- Subtract what will certainly go out in the next 30 days: salaries and social contributions, the VAT of the next return, supplier invoices falling due, an advance tax payment if one is coming, fixed costs such as rent and leasing.
- Add what will reasonably come in over the next 30 days: customer invoices falling due, but only from customers who pay on time.
A made-up example to make it concrete:
| Item | Amount |
|---|---|
| Balance in the account today | 48,000 |
| VAT of the next return | -9,000 |
| Salaries and social contributions at month end | -18,000 |
| Supplier invoices due within 30 days | -12,000 |
| Rent and fixed costs | -5,000 |
| Customer invoices coming in within 30 days | +11,000 |
| Really available in 30 days | 15,000 |
From 48,000 to 15,000. That is not a disaster, but it is a very different conversation if you are thinking about hiring someone next week or buying a new machine.
Put it in one place, every week
The arithmetic is not hard. The problem is that the pieces sit in different systems. The balance at the bank. The open invoices in your accounting package. The salaries at the payroll provider. The VAT calendar in your head.
A good cash flow overview brings them together in one number, with the list of what is coming underneath. This is exactly what a dashboard for a smaller company is good at. It belongs on the screen you look at every week, next to the other numbers an owner should see every week. Cash flow is not second on that list by accident.
And put a threshold on it. If the amount really available in 30 days drops below a limit you choose, you get a message. Then you know before the money is gone, instead of after.
What you can automate
Almost everything. The bank balance can be fetched automatically every day, as can the open invoices from your accounting package. Salaries and fixed costs are predictable and can be fixed items in the calculation. The VAT of the current period can be calculated from your sales and purchases. What is left for you is the decision about what to do with the room you have.
The claim
Your bank balance tells you how much is there, not how much is yours, so decide on what is really free in thirty days.
Tell me what keeps you up at night. No-obligation conversation. No sales talk.