Managing the Cash Flow System – Cash is King
Managing the Cash Flow System – Cash is King
A positive cash flow is one of the core values you go into business. You have a trade that you excel at, and want to show the world, as well as make a profit. If you are monitoring your E20-591 cash flow from the beginning, you will have more confidence when you are selling your product or service.
Company goals should include cash flow forecasts and how to manage that cash. In the last 5 parts of the Cash Flow Methods blog, we have provided ways to look at the Cash Flow and how to make it a goal in your company.
The monitoring process of any goal should be one of measurements. Your daily cash flow report can be used as a measurement of how well you are collecting outstanding monies and how you are spending them. The credit terms you have with vendors and banks can also be a measurement of how well you are paying your bills and the reputation you are creating.
How much debt and how much cash do you have should be checked on a monthly basis. This way you can determine if your note is called by the bank in these economic times, how much could you pay down? One of your cash flow goals may be to look for an investor to supplement for cash and give up some control and shares of the business.
Are you getting discounts from your Vendors? Is a goal of your company to stock up on raw materials for the idle cash you want to invest? If you do not have a large warehouse to stockpile materials, can the vendor hold on to it for you? Can you negotiate that you will pay a portion of the cost to hold it at their warehouse, and as you need it, pay down on the balance?
Are you out there networking with your customers to let them know if you can help them through these troubled times? Before you have a lost leader, you want to be sure you have a product that can sell.
What is the territory that you serve? Do you have to deliver your product to a jobsite? How much are you willing to spend on transportation? What are your actual costs?
Keep in mind that everything you do affects your cash flow. You may want to expand your business, but do not have the capital to do so at this time. Now is a good time to plan how much it will cost and where you will find the cash.
A monitoring system will help you see the goals you set and where they are on the yardstick. You may have your goals listed out in your business plan when you started the business. It is a common idea to have a E22-275 business plan. The problem with a business plan, is how often have you read it since it was written? Do you write it yourself, or did you buy one of those programs that told you what your goals should be?
At RCM we have a different kind of monitoring system. It takes in your goals, asking questions about those goals and creates a plan to achieve them. Check out our website http://rcmorganize.com
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