Mastering Your Cash Cycle - the Next Step

Okay, you have mastered the basics of the cash cycle.  You are collecting like a bunny, paying like a turtle, and sticking to your plan.  You are ready to push the envelope and actually make your money work for you.  By following the steps below, you can actually make $1 in revenue equal to more than one dollar.  This works for your business, and your personal finances.

1.)  Deposit your money as you receive it directly into an interest-bearing account.  To start with, keep it simple and use a savings account.  The interest on those isn't the greatest, but the cash is available to use as you need it.  

2.)  Pay your bills with a credit card or line-of-credit.  A line-of-credit is preferred, but a credit card with a limit equal to one month's budget is okay.  In calculating your monthly budget, subtract the bills that you have to pay for by check.  The credit card or line-of-credit provides a limit on monthly spending, and you can easily check your progress by checking your balance.


3.)  Pay off the balance on your credit card or line-of-credit monthly, before interest accrues.  This piece is key, so I will repeat:  do not allow the lending account to carry a balance.  If you spend more than you make you are starting on a downward spiral that can be very hard to overcome.

Voila, your cash earned interest in your savings account during the 30-day cycle that you borrowed from your credit card or loan.  

www.mint.com/how-it-works

A very good tool to use is the free online finance software, Mint by Intuit.  With a few easy steps, you can enter all of your accounts, which Mint will update with transactions for you.  There's a budget that's very easy to use, and there's also an overview screen that shows your cash balance and budget activity at a glance.  They even have an app so you can update and check any time, anywhere.


The cash cyle is a business process that most of us don't consciously think about.  By making a plan for the flow of cash, we can take our company's cash position from a passive result of business to an active participant in profits.