Steps to managing your operating cash flow statement

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BFF Manager
21/01
2014
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When it comes to financial management for growing companies, cash reigns supreme. The lag between the time that you have for paying your suppliers and the employees and the time that you wait to collect payment from customers can be an issue, but there is a solution with proper cash flow management. In the simplest of forms, cash flow management means that you are effectively delaying any cash outlay as long as you can while encouraging any outstanding accounts receivable accounts to pay as quickly as they can.

Measuring Current Cash Flow
Take the time to prepare your cash flow projections for the coming year, quarter and even week. Accurate cash flow projections will alert you to potential problems before they strike. A cash flow plan isn’t a glimpse into the future, but rather, they are an educated guess to help balance out a variety of different factors.
Begin the projection by adding any cash you have on hand at the start of the period along with any other cash that you expect to receive from other sources. During this process, you will gather information from collections, salespeople, service representatives, the finance department and credit workers. In all of these instances, you will need to review the amount of cash you have pending for interest earnings, customer payments, service fees and any other sources of business income.

Improving Upon Your Receivables
If you were to receive payment for items that you sold the minute you sold them, you wouldn’t have to worry about problems with your cash flow. Since that doesn’t always happen, you have to figure out other ways to improve your cash flow through proper management of your receivables. The underlying principle is to improve upon the speed in which you are able to turn supplies and materials into products, inventory into accounts receivable and your receivables into cash.

Managing Your Accounts Payable
Sales growth can often end up concealing a number of problems within the organization. When it comes to managing growing companies, monitoring expenses carefully is important. Avoid being lulled into complacency simply by expanding your sales. Whenever you see the expenses growing quicker than your sales, you need to look at your costs carefully and figure out places to control them. Take advantage of the payment terms provided by the creditor.

Surviving Any Shortfalls That Occur
At one point in time or another, you are probably going to find yourself in a situation where you don’t have the cash to pay the bills. Just because this happens, that doesn’t mean you’re a failure as a business owner. As an entrepreneur, you aren’t expected to predict the future perfectly. The key to being able to manage any shortfalls within the business is becoming aware of the problem from an early stage. Banks tend to be leery of those who need money right now and cannot wait. They prefer lending to you before you are in dire need. If the reason you are short on money is due to ineffective planning, bankers won’t be as interested in helping to fill your need.



Content Posted By Analia Gentile

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Great work guys. This is the most complete information about factoring and QuickBooks I've been able to find online. Thanks a bunch!

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