Cash, the ever-important resource for businesses all over the world. If you don’t have enough cash, things start going downhill fast. Have an excess of cash and you might have missed opportunities to invest or improve your business. Managing cash is definitely a challenging task for business managers. In fact, it’s probably one of the most important tasks of financial managers.
Long-lasting, well-established, and highly successful corporations often have very good control of their cash. It’s often the small, growing, and medium-sized companies that have issues with cash management. There are a few decent words of advice out there from the wonderful people at Inc.com we think anyone involved with cash management should read through. Don’t wait until you start to have cash problems, read the following tips; at the very least you’ll get a refresher in the valuable skill.
1. Cash Flow Budget – Create a “realistic cash flow budget” that covers the short-term and the long-term.
2. Work hard to get Outstanding Payments – The faster you invoice, the faster you get paid. Be prompt, accurate, informative, and include a payment date. If customers are slacking, make the effort to get in touch with them about their bills.
3. Discounts – Reward prompt payments by offering small discounts to customers. Better to have the cash than to be waiting for it.
4. Settle disputes – Don’t let disputes simmer if they seem like they won’t be solved. Compromise if you have to; it’s better to have some cash than no cash at all because of stubbornness.
5. Monitor – Inc.com advises, “Closely monitor and prioritize all cash disbursements.”
6. Analyze the Business – Examine the company to see whether other expenses can be cut to improve cash on hand. Activities with small profit margins especially should be looked at.
In good or bad times (especially bad times), it’s important to follow these tips. They can help you present a case to bankers and investors to show that you are taking the necessary steps to prevent any sort of disaster. At the very least you’ll be reducing your headaches and problems.
Ultimately, having strong billing and collection in your company will do a lot for making cash management easier to handle. But making sure you can project what you will need and monitor what’s currently happening will set you up for a solid environment to manage a company’s cash.