June 17, 2021

Small company Cash Flow Management

There are a number of tasks that are essential to end up being included in any small business cash flow management system. Some tasks are daily, some are weekly and others take a monthly basis. Defining who will be responsible for the tasks and routinely looking at that they are done is good management. Become proactive in knowing what cash you will require in the future.

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

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

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

3. Take a look at Profit and Loss at least month-to-month. Preferably prepare your P&L in house or even get your accountant to do it for you, but 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.

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

5. Ensure any excess money is earning you interest and is also easy to access.

6. See your bank for any line of credit before you need it

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

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