900 N. Kings Highway, Cherry Hill, New Jersey 08034
856.667.4100 ·
215.563.0276 ·
Fax: 856.667.3652
The Online Advisor - August 1998
Smart Business: Cash control is vital to your business success
Cash crunches consistently cause businesses to fail, while a healthy cash flow will let your business thrive and grow.
Multiple checking accounts, frequent overdrafts, big balances in non-interest bearing accounts, large accounts receivable, and no or low accounts payable are all symptoms of inefficient cash management. Maximize your cash flow by monitoring the following:
- Speed up receipts. Send your invoice along with the shipment of your product or the delivery of service. Even better, arrange for your customers to pay when the product is delivered.
- Open all mail immediately and deposit checks daily.
- Review your credit and collection policies. Slow-paying or delinquent customers should be made aware of your policies. Be firm. Settle disputes with customers timely while you are both in a negotiating posture.
- Slow down your cash outflow. Delay payment to your vendors until the latest date which still allows you to take advantage of discounts. Pay only the minimum estimated tax payments needed to avoid penalties.
- Keep in your checking account only the amount of cash needed to clear outstanding checks - no more, no less. All other idle funds can be invested.
- Forecast your cash needs regularly to avoid costly last-minute borrowing.
Remember, cash mismanagement is a major contributor to business failures. Successful cash managers are free of the burden of cash constraints. They are able to take advantage of changes in their markets and trends in their industry, even to become innovators because of the flexibility that good cash flow provides.