In running small business, there are several important tasks to be included in cash flow management system. The tasks can be done in daily, weekly and monthly term basis. The good management system has a major task to define the persons who are n charge of the certain tasks and do the routine checking to ensure the management system had been done in a proper manner. In this management system, you need to be proactive to know the cash you will need in the future.
There are following major tasks to manage the small business cash flow management in daily operation:
- Prepare and evaluate your cash flow plan in weekly basis. You need to find out how much cash you are starting with, when the cash will due in and what cash is due out.
- Manage your daily cash income including the credit card payments. Supervise closely the internal controls for the cash management. You need to find different person to reconcile your bank accounts and cash accounts to the persons who take care of deposits of checks and cash.
- Evaluate your profit and loss in monthly basis. It is preferably if you prepare the profit and loss statement in house or you may hire the accountant for doing it but do not delay too long. There are accounting software package like Quickbooks and MYOB that can be appropriate for small businesses and are user friendly for setting up or generating P & L reports.
- Review the Balance Sheet regularly in monthly basis. You can calculate your quick ratio (liquid assets divided by current liabilities). The good standard of the quick ratio should be bigger than 1 and current ratio (assets divided by liabilities should be at least 2 to 1.
- Make sure that any redundancy cash is generating the interest for you and also easy to access.
- Meet your back to discuss the credit term in case you need it.
A small business owner may be using his/her own certain methods for the small business, but cash flow management is the essential area that small business owner have to be considered not to delegate or ignore.
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