Cash is King!
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My 6 Proven Must-Follow Cash Flow Rules
You can make operational losses for years, you can still survive. However, if you don’t have cash immediately, your business has no “air” to survive for even another day.
Running out of cash is the definition of failure in business. Make the commitment to do what it takes so it does not happen to you.
1. Check your company Cash Balance at 9am daily before you start your business day
* Don’t start your business day without knowing your Cash Position at the beginning of the work day.
* Log in to all your bank accounts online and record down all bank balances on Daily Cash Balance Record.
* Have this Record Whatsapp onto your mobile phone without fail.
2. Do Daily Sales Closing, Settlement and Bank-in
* For those with retail outlets, have a company rule requiring all retail outlets to do Daily Sales Closing on either POS or CRM or Manual system, tally these Sales achieved against Settlement mode ( Cash, Visa, Vouchers, etc ), and
* ensure all Cash takings are all banked in first thing the following work day so that your Accountant has visibility of your group’s Cash position per (1) above.
3. Update your Cash Book daily
* The key to keeping an accurate cash balance in your accounting system is to do today’s work today.
* When you do this, you will have the numbers you need – when you need them.
* Either You Do the Work or Have Someone Else Do It.
4. Don’t Manage From the Bank Balance
* The bank balance & the cash balance are two different animals.
* Rarely will the 2 ever be the same.
* Don’t make the mistake of confusing them. Do not manage your cash flow using the bank balance. It’s a prescription for failure.
* You reconcile your bank balance. You don’t manage from it.
5. Know What You Expect the Cash Balance to be 6 Months From Now
* Always do Rolling Cash Forecast to anticipate potential Cash Deficit or Surpluses.
* Do not leave this to chance. Cash Flow Problems Don’t “Just Happen.”
6. Reconcile your Profits earned for the month to the month-end Cash Balance
* Don’t stop reviewing your company’s performance by just looking at the Profit & Loss Statement.
* Have your Accountant do up a Cash Flow Statement which shows clearly how Profits earned for the month is reconciled to the Month-end Cash Balance.
* This will show exactly how Operational Cash was generated, Working Capital changes, used in Capital Expenditure, Loans Repayment & Drawdown, Income Tax Payment, Dividends paid out to Shareholder ( if any), and then add the Net Cash amount to Month-beginning Cash Balance to arrive at the Month-end Cash Balance.
Eliminate Your Cash Flow Worries So You Are Free to Do What You Do Best – Take Care of Customers and Make More Money.Good Luck !CBO can assist you in setting up your Cash Management workflow encompassing these 6 proven rules as mentioned above.
If you need help, feel free to contact us at :
(M) +65 90880669
