Managing the cash of your business – this is the sort of thing you need to be thinking about daily. It is not something you keep at the back of your mind. You must manage your cash every single day because cash is the lifeblood of your business.
You should be checking how much money your business takes in, how much it spends, and the status of your receivables on a daily basis. If you do not do all these things, you risk being blindsided by a cash shortfall which could cripple your business.
If you do not have the time to manage the day-to-day cash of your business, give that responsibility to someone you trust who has the skill and the time to do it well.
There are several aspects to effective cash management. For example:
- Use credit applications to figure out who you will extend credit to and how much you will extend. Ask each customer to complete a credit application and then evaluate the information on each one using a credit scoring process.
- Make timely billing a priority. The quicker you bill, the faster you will get paid and the less likely that you will have a problem with cash. Although a lot of businesses invoice once a week, you should be invoicing every day.
- Understand how your customers handle their accounts payable and what you must do to ensure that they pay you as quickly as possible.
- Monitor your accounts receivable on a daily basis and do not let bad debt accumulate. Absolutely do not let any accounts go past due as it will have a negative impact on the financial health of your business.
- Use an electronic system. If you don’t have one, get one!
- Manage your credit relationships with your carriers as aggressively as you manage your shipper relationships.
Following the above points will help you effectively manage your cash and pave the way to financial success for your business.[DISPLAY_ULTIMATE_SOCIAL_ICONS]