Small company Cash Flow Management

There are a number of tasks that are essential to become included in any small business cash flow administration system. Some tasks are everyday, 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. Be proactive in knowing what cash you will need in the future.

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

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

2 . Reconcile your cash used daily including payments received through credit cards. Monitor your internal handles for handling cash. Have each person reconcile your bank accounts and cash 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, but do not wait too long. Accounting software programs such as Quickbooks and MYOB are usually suitable for a range of small businesses and are simple to set up to generate P&L reports.

4. Review your Balance Sheet monthly. Calculate your quick ratio (liquid resources divided by current liabilities) -should be greater than 1 and your current ratio (assets divided by liabilities) – at least 2 to 1 is good.
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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 owner may wear many hats throughout his/her business, however Cash Flow Administration is one area that the Business Owner is wise not to delegate or ignore.

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