Google+ Followers

Followers

Growing Your Wealth Exponentially

Growing Your Wealth Exponentially
BY JAMES OH

Search This Blog

Loading...

LETTING GO AND MOVING ON BY JAMES OH

LETTING GO AND MOVING ON BY JAMES OH
TO BUY PLEASE CLICK AT THE IMAGE

Translate

MINDSET SHIFT: EMPLOYEE TO ENTREPRENEUR

MINDSET SHIFT: EMPLOYEE TO ENTREPRENEUR
BY JAMES OH

Tuesday, December 27, 2011

MANAGING CASH FLOW EFFECTIVELY

Dear friends,



How many of you have heard of the phrase "Cash is King"? I believe many of have. Why is cash King? This is because cash is the lifeblood of any company. It reflects the financial health of your business. The in and out of your cash flow will be the determining factor on how you manage your finances. If the inflow of money is not sufficient to cater for the needs of the business, it may somehow affect the viability of the company. Hence, cash flow is a key element of the success of any business. Without cash flow, the profits are meaningless. 


Some profitable business may even end up in bankruptcy or be wound up, should the amount of money flowing out is not comparative to the amount of money flowing in. Companies that has no good management of cash flow may not be able to make the investments necessary to compete, or may be forced to pay more in its loan activity.

Because of its crucial importance, I would like to share some tips with you on how to manage the cash flow effectively:

1. Make a projection of cash flow over a periodic of time.

Always determine how much the inflow before determining the future cash to be spent. Pay accordingly to the priority especially if there is a heavy penalty fee imposed should you not settle on or before its due date. Interest and overdue charges may be very expensive and this is an added expense for your business.

2. Cash collection needed to be reviewed and improved constantly.

To encourage your clients to pay on time or earlier is a wise move. Alternatively, you may request some down payments for ordered purchases, if applicable. Review and monitor receivables regularly and identify those that are about to become due.

3. Try not to pay debts earlier than due date even if there is cash available for you to do so, always on due date.

Establishing a good pay master  track record with your suppliers will help you  build goodwill for your company. This will assist you in obtaining more flexible and better payment terms and conditions.

4. You may make good use of the surplus funds at any period of time to earn some interest income by placing them into the money market. The quantum of interest income generated is very much dependent on the period of the available surplus fund and the interest regime at that particular time.
Therefore, it is very rewarding for anyone who is willing to work hard and smart to accomplish strong cash flow. To do so, you are required to analyze and manage your cash flow more effectively and fruitfully.

By now, you are able to see how cash flow will determine failure and success of any business. Sometimes one will have to a pay heavy price for just stretching the payment terms.

James Oh
Post a Comment