Small company Cash Flow Management

There are a number of tasks that are essential to be included in any small business cash flow management system. Some tasks are everyday, some are weekly and others take a monthly basis. Defining who may be responsible for the tasks and routinely checking that they are done is good management. End up being 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 essential to include the following tasks:

1 . Get ready and review your Cash Flow Plan every week. How much cash are you starting with, what money is due in and what cash is due out.
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2 . Reconcile your cash used daily including payments received from credit cards. Monitor your internal regulates for handling cash. Have different people 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 month-to-month. Preferably prepare your P&L in house or get your accountant to do it for you, yet do not wait too long. Accounting software packages such as Quickbooks and MYOB are usually suitable for a range of small businesses and are easy to set up to generate P&L reports.

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

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

6. See your bank for the 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 is wise not to delegate or ignore.

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