Good cash management can ensure business survival

Cash management is important for all businesses. The goal is to manage cash balances effectively in order to maximise the availability of cash and avoid the risk of insolvency, do not invest it all in assets.

Managing cash flow is the most important job of business owners. Many owners intent on growing their company and bringing down debt tend to spend all their funds whereas they should leave room for the business to absorb difficult financial times.

The key to successful cash management lies in having realistic projections, monitoring cash collection, effective billing and not over spending.

It’s important to engage all members of staff so that they understand the need to ensure business survival.

Steps to address temporary cash flow problems include realistic budgets, additional efforts to collect outstanding payments, discounts for prompt payments, compromising on some billing disputes with clients and contacting creditors to re-negotiate payment terms, selling excess stock and making sure all operational expenses are cut without disabling the business.

Taken from a discussion at the  Business Exposure Group


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