Imagine this: You walk out of your house tomorrow morning and walk to your car to drive to the office. You slide into the seat, fasten your seatbelt and start the engine. Your muscle memory takes hold of the gearshift to put the car in reverse but you also look down at it to make sure you are moving it to reverse and not drive or neutral. You suddenly notice there are no letters of D, R or N next to the gearshift. You then look at your middle console where you control your radio and air conditioner and see it’s completely black. Your eyes scan to the left and the dashboard above your steering column is also black. You have no dashboard!
You then begin to question the safety of driving the car. You realize if you do decide to drive to the office, you’ll have no indication if you are in reverse or neutral until your car starts moving, you won’t know if you need fuel, and you won’t know if you are breaking the speed limit laws. Should you stay home? Should you get the dashboard working again? Or should you risk it and drive to the office?
You might risk it and chance a drive to the office. But once you’ve arrived at the office, I bet you’ll be putting a plan into place to get your car to the mechanic. You would never drive your car more than a few days with no dashboard.
But many business owners run their businesses year after year with no financial dashboard or indicators.
A cash flow dashboard is more robust and interactive than a forecast. It’s a snapshot of the current day’s cash position with a projection of cash inflows and outflows over the next week or month. It’s very short term, and it should be updated daily or weekly.
A cash flow dashboard is just like your car’s fuel gauge. When you go on a 10- hour car trip, you more than likely fill up your gas tank before embarking. Even if you know you can drive several hours without needing more gas, you check your fuel level often. It’s a habit you created because running out of gas is painful.
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