Tuesday, May 24, 2011

Simple Cash Flow Management

If business is the body of human, then cash flow is the blood that keeps the body awakes. Cash flow is important thing and crucial for business, big or small of business. Without a good management of cash flow, many business, although profitable business, can be end up in bankruptcy because cash-in and cash-out situation is not balance. The amount of cash in is less than the amount of cash out at monthly.

These simple steps below can help the balance of cash flow.
Prepare cash flow projections for the future (next month or year). It will help the firm to avoid problem by giving a warning before the problem comes. Projections are made by noticing the factors such as customers' payment, suppliers' payment, upcoming expenses, and upcoming incomes.
Start the projection of cash flows in cash on hand at the beginning of the period cash and others received from various sources. You will be presented for obtaining information from suppliers, staff, collections, credit and finance department of your employees.

And then, detailed knowledge of the amounts and dates for next payout, not only when every penny spent, but to what. The firm should has a projections for each of the major expenses, including rent, equipment (if purchased for cash), withheld wages and salaries, sales and other taxes or benefits to be paid, equipment purchased for money, taxes, utilities, office , debt, commercial vehicle and equipment maintenance and fuel, and cash dividends.

Make the most of the conditions for the payment of creditors. Use of electronic funds transfer payments on the last day of term of payment. Continue with existing suppliers, while maintaining the use of money as long as possible. Communicating with suppliers, so the supplier knows about the firm financial situation. JUXVEQWNXEY6

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