Plan - Manage Cash



Managing your Cash is a Must
Small business owners often fail to keep track of their cash flow because they don’t fully understand the need for managing cash. Others do not enjoy the prospect of having to maintain more paperwork than necessary.

" Tracking your cash gives you early warning of potential liquidity problems ..."

You need to put in a system that will track your cash coming in as well as the cash being paid out. This is not difficult because it is possible to buy simple software that provides a system to be put in place to control this area.

Cash needs to be tracked on a daily basis. This is because your cash situation may change daily, depending on costs that may arise unexpectedly. Maybe an unexpected opportunity presents itself and requires immediate cash.

Tracking your cash will give the business an early warning system of potential liquidity problems. This will allow you to have plans in place to correct what could easily become a dangerous situation.

It doesn’t matter how prosperous your business. If you don’t track your cash you won’t know what you have available at any specific time to keep the business running. If you find that expenses need to be trimmed back to improve your cash situation, this can hinder the growth of your business.


Cash Management is Simple
Effective cash management is a discipline that every business owner needs to learn. Good cash management is not difficult.

It simply involves:

  • Knowing when, where and how your cash needs will occur.
  • Knowing the best sources for meeting your cash requirements.
  • Being prepared to meet those requirements when they occur.
  • Keeping close to your suppliers and your bankers.

The starting point for managing your cash is developing cash flow projections. You need to project what your business is going to require for your current needs as well as your future needs. This can be arrived at by looking at how cash was used in the past, and then take into account the plans the business has for the future.


3 Main Elements of Cash Management
Cash management involves three main areas:

  1. Planning – Making sure you have sufficient cash supply available at any time.
  2. Control – Making sure your cash is efficiently used so that the receipts coming into the business can more than meet the payments you have to make.
  3. Investing – If you have any cash surplus at any time, put it away for a rainy day.

It is the businesses able to control these three important factors that will win out when difficult times come.