
Maintaining an accurate cash balance and optimizing cash flow are critical for the financial health of your business. Here are five essential steps to ensure your company stays on top of its finances:
1. Check Your Company Bank Account Daily
Every morning at 9 am, check your company bank account for new receipts from clients and the current balance. Ask your secretary or trusted assistant to log into the company bank portal and WhatsApp you the details they see on their computer. This ensures you’re always aware of your cash position and any new transactions.
2. Daily Sales Reconciliation
For businesses involved in retail sales, it’s crucial to reconcile daily sales, settlement modes, and bank deposits. This process ensures the completeness of sales and receipts, preventing any discrepancies that could affect your cash flow.
3. Update Your Cash Book Daily
To keep an accurate cash balance in your accounting system, it’s essential to do today’s work today. Update your cash book daily to reflect all transactions, ensuring your records are always current and accurate.
4. Perform Monthly Rolling Cash Forecasts
Conduct monthly rolling cash forecasts to anticipate potential cash deficits or surpluses. Cash flow problems don’t “just happen”; they can be predicted and managed with careful planning. This proactive approach allows you to prepare for future financial needs.
5. Reconcile Profits to Cash Monthly
Have your accountant prepare a monthly cash flow statement that clearly shows how profits earned are reconciled to the month-end cash balance. This statement provides a detailed view of how cash moves through your business, helping you understand the relationship between profits and actual cash in the bank.
By following these steps, you can maintain an accurate cash balance and optimize your cash flow, ensuring your business remains financially healthy and resilient.
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Written by Kelvin Loh