Small company Cash Flow Management

There are many of tasks that are essential to become included in any small business cash flow management system. Some tasks are everyday, some are weekly and others take a monthly basis. Defining that is responsible for the tasks and routinely checking that they are done is good management. Become proactive in knowing what cash you will need in the future.

To manage the cashflow of a business, within the day to day operation, it is essential to include the following tasks:

1 . Prepare and review your Cash Flow Plan weekly. How much cash are you starting with, what cash is due in and what cash is due out.

2 . Reconcile your cash taken daily including payments received through credit cards. Monitor your internal regulates for handling cash. Have each person reconcile your bank accounts and money accounts to those who deposit the particular checks and cash.

3. Take a look at Profit and Loss at least monthly. Preferably prepare your P&L in house or even get your accountant to do it for you, yet do not wait too long. Accounting software packages such as Quickbooks and MYOB are suitable for a range of small businesses and are easy to set up to generate P&L reports.

4. Review your Balance Sheet monthly. Estimate your quick ratio (liquid property divided by current liabilities) -should be greater than 1 and your current ratio (assets divided by liabilities) – at least 2 to 1 is good.

5. Ensure any excess cash is earning you interest and it is easy to access.

6. See your bank to get a line of credit before you need it

A Small Business proprietor may wear many hats across his/her business, however Cash Flow Management is one area that the Business Owner pays not to delegate or ignore
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