Small company Cash Flow Management

There are many of tasks that are essential to become included in any small business cash flow administration system. Some tasks are daily, some are weekly and others take a monthly basis. Defining who is responsible for the tasks and routinely checking out 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 important to include the following tasks:

1 . Get ready and review your Cash Flow Plan every week. 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 controls for handling cash. Have different people reconcile your bank accounts and cash accounts to those who deposit the checks and cash.
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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 programs 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. Calculate your quick ratio (liquid possessions 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 for the line of credit before you need it

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

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