Cash is king, and that is especially true for small businesses. As an owner or manager, you must
keep an eagle eye on cash balances to ensure the financial stability of your company. You don’t
want to be caught in a situation where it’s Monday, cash reserves are low, and there’s a big payroll run on Friday. Antacids, anyone?
There are numerous other nightmare scenarios like this to be avoided, and you can get closer
to that goal with healthy cash flow management. Best cash flow practices will also allow you to
seize opportunities for growth when they appear, help you endure the ups and downs of the business cycle, and lower your stress as you operate your business day-to-day.
One tool that is extremely useful, and that we highly recommend in the management of cash
flow, is the daily cash balance report. Just as the name sounds, this report gives you a daily
snapshot of your cash position.
The report itself is simple, and should be readable on your phone or tablet, so you don’t even have to look at it on a computer – that way you’ll have easy, instant access to it anytime. The report includes a beginning balance, inflows, outflows, the net cash flow (indicating either positive or negative cash flow for the day), and an ending balance.
A more detailed report could even include which customers paid.
Tracking these numbers daily will help you stay ahead of the decision-making curve and avoid
being blind-sighted, an advantage in tackling slow-developing issues that are nevertheless
difficult to solve.
Cash flow management also offers the benefit of making you a better decision maker, allowing
you to evaluate new expenditure and investment projects with a more comprehensive picture
of what’s going on financially.
If you need help setting up a daily cash balance report or need an analysis of your cash flow
situation, contact us at info@sbsaccountants.com or 770-284-5537 today for a consultation.