If you are to start a new business, or you are an existing business owner, you will soon experience your management skills at cash flow management. Unless you are super fortunate, most home business tend to wind up their own commitments within six months of their operation because of the lackluster performance in mobilizing the most important unit “the Cash”. Talking about home business, this important unit could be rightly expressed as “Cash can be King! “. There are a number of factors contributing to the poor cash flow management, the uncertain economy being at the top. On the other hand, the lack of financial analysis and coaching can lead to a complete disaster. However , with proper awareness, you can execute the money effectively. For “awareness” you need not to go to a school and have an respects in it, a basic understanding and correct planning would do it all.
Confused? Here are some very useful tips for an effective income management.
Les Mason son, author of Cash, Cash, Cash: The three principles of business survival and success states ” Cash flow is focused on getting the money from customers sooner, paying bills at the last possible moment, concentrating money to an one bank account, managing accounts payable, accounts receivable, and inventory more effectively, plus squeezing every penny out of your everyday business”
The statement seems straightforward but you may find a trouble reaching the desired management, unless you know how exactly to reach there. Here is how we can divided the statement into tips, for a better execution of the statement.
᾿ Collect the money from your customers as earlier as possible. You could achieve that by immediate delivery of invoices using the due payment date and you may setup a penalty for if customer makes a delay in the payment. Deposit your cheques received, to the bank exactly the same day to avoid any loss around the float.
᾿ Unlike collecting earlier as possible, you should not make payments earlier than you have to. Always pay your expenses no sooner than your due date, unless you are provided with a discount as an incentive.
᾿ Don’t forget to reconcile your financial institution statements, manage your accounts receivables and payables properly and successfully.
᾿ Inventory is not your cash however the moving inventory is your cash flow. Manage the inventory adequately, that is the faster you stock in, the better. But keep it moving!
᾿ Finally study from you past experiences. Learn to know who are your potential customers, and who are your bad debts or even slow customers. Do not work with even your lagged customers unless extremely important.
Be aware in your actions to control the “Cash Flow” considering the huge problems resulting as a neglect in this Unit.. With regard to Businesses’ missing out on the proper management, manages to lose the potential in the market and does not support the existence. Whether it’s a multibillion firm or a small store, cash will be the bread and butter of the company and should be managed accordingly
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