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Cash flow: Management practices
 Good
cash flow management means you can anticipate when your cash flow
needs will occur. Your cash flow budget will help you predict what's
coming, but you have to be diligent in daily record keeping and
reporting of cash in and cash out.
The following steps can help you monitor cash flow:
- Use prenumbered cash receipts and account for all
receipts
- Deposit checks daily
- Send customer invoices within two days
- Collect receivables within 60 days
- Take advantage of cash discounts
- Use prenumbered checks for all disbursements
A good cash flow manager should be ready to meet challenges.
For example, if your company has a history of slow summer sales,
you may have trouble meeting payroll in those months. If you have
periodically reviewed your cash flow budget and projections, you
will be prepared for the crunch with additional sources of cash,
and will have established good relationships with creditors and
banks should a short-term loan be necessary.
Here are some ways to project and meet cash flow needs:
- Anticipate payroll
- Anticipate outstanding debt payments
- Set money aside for expansion, emergencies and
opportunity purchases
- Use short-term financing when necessary
- Establish a line of credit with a bank to avoid
making bad decisions in a cash panic
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