Short answer
Business money management relies on four habits. Money is allocated upon receipt for profit and taxes, sales are compared to the break-even point, invoices are tracked until collection, and cash flow is forecast 12 months in advance.
Verified on from Andi Haxhillari, Certified Accountant. Compared with Articles 106 and 107 of Law No. 92/2014, Articles 63 and 65 of Law No. 29/2023, and Article 59 of Law No. 9920/2008.
Business cash management is the daily work that ensures you have money in your account on the day you need it—for taxes, for payroll, and for yourself. It doesn't require an expensive program. It requires four habits: separating money as it comes in, knowing your break-even point, collecting payments on time, and a simple 12-month forecast.
How do I avoid running out of cash and how do I get my money? Money isn't managed by formulas; it's managed by habits. That's Mike Michalowicz's breakthrough in Profit First: divide your income into envelopes so that from day one you allocate profit, taxes, your salary, and operating expenses. Verne Harnish in Scaling Up adds another tool, the cash cycle: how many days it takes for a dollar to travel from your pocket to the product, to the customer, and back into your pocket. At this level you learn to give money order, from the break-even point to pricing, collections, and budgeting.
This page explains each of these practices with examples in lek, shows how the break-even point and margin are calculated, and which tax dates you need to keep on your calendar. Each topic has a more detailed subpage linked within the text.
Read also: When profit isn't enough, liquidity and hidden cash in the business.
| The question | Answer in effect today |
|---|---|
| How is the break-even point calculated? | Monthly fixed costs divided by the percentage gross margin. |
| What margin does the 30% add over cost? | Around 23%, because the margin is measured on the selling price. |
| Until when is VAT paid? | On the 14th of the following month, Articles 106 and 107 of Law No. 92/2014. |
| Until the payroll is declared and the contributions are paid. | The 20th day of the following month, Article 65 of Law No. 29/2023 |
| When are the installments of the income tax paid? | March 31, June 30, September 30, and December 31, Article 63 of Law No. 29/2023 |
| Cash payment limit between two businesses | 100,000 lekë. For amounts above this value, payment is made through the bank, pursuant to Article 59 of Law No. 9920/2008. |
Money is divided on the day it comes in, not at the end of the month. Money that stays all in one account gets spent entirely, because a single account shows a total that seems small even when part of it is actually due to taxes.
Mike Michalowicz's Profit First method solves this with several bank accounts, like envelopes. One for profit, one for taxes, one for the owner's salary, and one for operating expenses. Every deposit is allocated according to specific percentages, and the business operates solely on the expenses envelope.
The tax envelope is the one that protects you the most. When the VAT collected from customers passes through it on the day of collection, the 14th no longer finds you without money. How percentages are set and how you start with small figures can be found on the page of Money management with Profit First.
You need to sell at least as much as your break-even point, which is calculated by dividing your monthly fixed costs by your gross margin as a percentage. Fixed costs are those you pay even when you don't sell anything, such as rent, base salaries with benefits, utilities, and accounting.
With a fixed cost of 600,000 lek per month and a 40% gross margin, the break-even point is 1,500,000 lek in sales per month. Over 25 working days, that comes to 60,000 lek per day, a figure you can compare to your nightly cash drawer. You'll find the two-component formula and the most common mistakes on the page. at the point of equality.
Because the surcharge is calculated on the cost, while the margin is calculated on the selling price. A product that costs 1,000 lek and sells for 1,300 lek has a 30% surcharge, but its margin is 300 divided by 1,300, which is about 23%.
Mistakes are costly, because the break-even point is calculated by margin, not by the surcharge. How to set the price starting from the margin you need is explained on the page of price and margin.
Get paid on time when the due date is clearly stated and consistently enforced. The due date is set in the contract and on the invoice; the invoice is sent on the day the work is completed, a polite reminder is sent before the due date, and every week the list of unpaid invoices is reviewed.
Also keep in mind the cash limits. Transactions between two businesses valued at over 100,000 lek and those between a business and an individual valued at over 500,000 lek must be paid only through the bank, in accordance with Article 59 of Law No. 9920/2008, as amended by Law No. 79/2025. This same law requires that by December 31, 2026, businesses that do not yet have a POS terminal must also be equipped with one, with some exceptions. You can find examples of reminders and the order of follow-up on the page of receipts.
With a simple spreadsheet that shows, for each month, your starting cash, expected incoming amounts, guaranteed outgoing amounts, and ending cash. When a month comes out in the red, you can see it several months ahead and have time to act—postpone a purchase, cash in sooner, or talk to your bank.
The first entries recorded are the tax ones, because their dates don't change. VAT is payable by the 14th of the following month, and the payroll with contributions is due by the 20th. Businesses that pay corporate income tax also make prepayment installments on March 31, June 30, September 30, and December 31.
The annual budget shows how much you aim to earn; the forecast shows when the money comes in and when it goes out. You build the budget on one page using the page of annual budget, while the table month by month with the page of liquidity planning.
The number of days in the cash conversion cycle. It is calculated by adding the days of inventory, the days sales outstanding, and subtracting the days payables. With 45 days of inventory, customers paying in 60 days, and suppliers paid in 30 days, the cycle is 75 days.
This means that the business itself finances 75 days of operations before the cash is returned. Every day you shorten—whether in inventory, in collections, or in your supplier terms—frees up cash without selling a single extra dollar. You can find the step-by-step measurement on the page of money cycle.
A store has fixed costs of 600,000 lek per month and sells all products at a 30% markup over cost. The owner thinks he has a 30% margin and calculates the break-even point as 600,000 divided by 0.30, which is 2,000,000 lek in sales per month.
The actual margin is 30 divided by 130, about 23.11 TP3T. The true break-even point is 600,000 lekë divided by this margin, i.e., 2,600,000 lekë. The difference is 600,000 lek in monthly sales that the owner did not forecast.
In a month with sales of 2,200,000 lek, the owner thinks he's making a profit, while in reality he's losing. With a 23.11% margin, these sales generate about 508,000 lek in margin, which is roughly 92,000 lek less than the fixed costs. The solution isn't necessarily to sell more. It's enough to set the price based on the target margin or to reduce the fixed costs.
Every time there is a tax or financial change that affects your business, we notify you directly by email with a practical explanation.
Send me free notificationsIt is the monthly sales figure at which the margin exactly covers fixed costs, with neither profit nor loss. It is calculated by dividing the monthly fixed costs by the gross margin percentage.
The surcharge is measured on cost, the margin on the selling price. Therefore, a 30% surcharge yields about a 23% margin, a 50% surcharge yields about a 33% margin, and a 100% surcharge yields a 50% margin.
Yes, but only for transactions up to 100,000 lek. Above this amount, payment is made through the bank, in accordance with Article 59 of Law No. 9920/2008, as amended by Law No. 79/2025.
Once a month, after the month closes. The planned figures for the just-ended month are replaced with the actuals, and a new month is added at the end so that the table always shows 12 months forward.
The 14th for VAT, the 20th for payroll and contributions, and the four advance payment dates for profit tax—March 31, June 30, September 30, and December 31—when your business pays this tax.
Not at first. An Excel spreadsheet with a 12-month budget and forecast is enough for most small businesses. You can find ready-made templates at Resource Center.
Cash envelopes and the habit that protects you even from tax deadlines.
Read →How much do you need to sell per month to cover costs before you start making a profit?.
Read →How to set your price based on cost and margin without unknowingly selling at a loss.
Read →How to get paid on time, deadlines, and tracking unpaid invoices.
Read →A simple budget that's read and followed, not a spreadsheet that nobody opens.
Read →Month-by-month cash forecasting so that deadlines won't catch you by surprise.
Read →How long does money remain tied up in inventory and with customers, and how can it be shortened?.
Read →Accounting, financial statements, tax returns, and financial advisory services in a monthly package. The first consultation is free and with no obligation.
You manage the money, but you need to have the numbers accurate and on time. We provide them to you every month, along with the tax deadlines and the figures you need for cash forecasting.
