Small Business Cash Flow Management

There are a number of tasks that are essential to become included in any small business cash flow management system. Some tasks are everyday, some are weekly and others are on a monthly basis. Defining who will be responsible for the tasks and routinely examining that they are done is good management. Become proactive in knowing what cash you will need in the future.

To manage the cashflow of a business, within the day to day operation, it is important to include the following tasks:

1 . Get ready and review your Cash Flow Plan weekly. How much cash are you starting with, what cash is due in and what cash arrives out.

2 . Reconcile your cash taken daily including payments received through credit cards. Monitor your internal settings for handling cash. Have different people reconcile your bank accounts and cash accounts to those who deposit the checks and cash.
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3. Take a look at Profit and Loss at least month-to-month. Preferably prepare your P&L in house or get your accountant to do it for you, but do not wait too long. Accounting software packages such as Quickbooks and MYOB are suitable for a range of small businesses and are simple to set up to generate P&L reports.

4. Review your Balance Sheet monthly. Calculate your quick ratio (liquid property divided by current liabilities) -should be greater than 1 and your present ratio (assets divided by liabilities) – at least 2 to 1 excellent.

5. Ensure any excess money is earning you interest and is also easy to access.

6. See your bank for the line of credit before you need it

A Small Business proprietor may wear many hats throughout his/her business, however Cash Flow Management is one area that the Business Owner is wise not to delegate or ignore.

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