Flow the Cash with Control

Cash is the major raw material to start and proceed in a business. The business entity is void without proper cash in hand or in account. To start a business seed capital is required and to succeed further this cash needs to be flowed and managed evenly. Simply saying - cash is the king for a business that cannot be either ignored or forgotten.

Right from the smaller business units to the major players all need this stuff to work. It’s the basic entity as well as the life blood for any business .The big players like Warren Buffett, Steve Jobs, Bill Gates; none of them would have succeeded without a balanced cash flow handling of business.

Cash flow handling is the major part that needs to be understood for a smooth business flow. Mastering cash management makes one master of the maximum business tic-tacs. Around 70 % of business fails every year due to such mismanagement and mishandlings.

Forecasting and pre planning always helps in minimizing these problems. Proactive approach minimizes the chances of failure and fall. Regular monitoring the cash flows would help in proactive analysis of the business. The major causes of failure in cash monitoring are:

• Debtors
• Creditors
• Too much debt
• Rapid Growth
• Temptation to Over-Invest
• Excessive Stock Levels
• Market Changes

Les Masonson, author of Cash, Cash, Cash: The Three Principles of Business Survival and Success, says cash flow is all about, "getting the money from customers sooner, paying bills at the last possible moment, concentrating money to a single bank account, managing accounts payable, accounts receivable and inventory more effectively, and squeezing every penny out of your daily business."

The various suggestions that could be followed for an effective cash flow, control and management are:

1. Fast Cash Collection: Raise the invoices after timely processing of the customer’s demand and from other parties as well.

2. Timely Cheque Deposition: Deposit the cheques at the earliest and timely for faster retrieval of the money.

3. Robust Account Receivable Policy: There must be a robust and strong accounts receivable procedure and policies supporting faster and proper cash handling.

4. Slow Disbursement: Antonym to the collection procedures, the disbursements must be at a slower pace than collection.

5. Avoid Extra Credit in Bank: Excess amount must be avoided in bank account as availability leads to need. If need arises the cash will be spent easily.

6. Account Analysis Statement: One must always keep a track of their account analysis statements to have a proper track record of every piece of cash.

7. Convert Inventory into Cash: Every inventory in stock must be looked with a view of conversion into cash, and then only the funds will roll on.

8. Continuity in Sales: There must be continuity in sales being carried out such that a continuous round about in the business is maintained. This would manage the inflow and out flow itself.

9. Licensing Agreements: Proper licensing of the agreements must be done with the vendors as well as the customers to avoid any discrepancies.

10. Licensing the Senses: Last but not the least, one needs to also license there own senses in business world. Sense need to be very vibrant while handling cash flow, even a single minor mistake in cash management can lead to a large loss.

Thus, one needs to be very careful in collection, disbursement, inflow, and outflow; in short, cash handling and management of cash procedures. Cash is the most robust and equally fragile entity of business, so it needs to be cared a lot.

Hope these suggestions would help a lot in a better cash control and management for a business to flourish and sustain…..