CORPORATE CASH MANAGEMENT TIPS

The facts of Cash

1. Cash is Heart of Business.

Every transaction needs cash. Even when a purchase is made with a credit term, it still need to be paid in cash on the due date. Purchasing, payrolling, maintenance, rental, office supplies, all those transaction need cash for payment.

2. No Business Can Run with Lack of Cash.

To enable company to finance the operation and obligation, company should maintain sufficient cash. Insufficient cash will influence most scale of company’s operation, further more it will prevent the company grow smoothly and will keep company away of the objectives.

3. Cash is The Most Liquid Among The Assets.

As a most liquid asset, huge of risk in it. Fraud most often happened in cashing area. Corruption, lapping. Appropriate cash treatment is the essence.

Issues And Tips of Cash Management

1. Cash Planning

Cash management should be addressed from the establishment of the company, right taken during the decision of capitalization. The right capital size should match to the scale of company that would be established.

Capital source is also a critical issue during the establishment. When the initiators have insufficient capital, they should plan to find a good capital outsourcers. In term with outsource capital, rate of interest and return period should be bear as main consideration. Rate of interest should be measured accurately according to the profitability prospect. As for the return period it should match to the cash turnover forecasted.

During the initial operation, cash planning should be generated. An accurate sales forecast and budgeting should be defined to enable to generate a cash planning. Cash allocation should be set to match the priority scale of operation.

2. Cash Disbursement

Cash disbursement should follow the cash allocation and priority. A fast grow company may often disrupt the priority by keep disbursing cash and away off the budget. In this case, manager should go back and stick on the cash allocation that been set.

A weekly cash flow analysis and daily budgeting is a one of the most effective tools to keep company stick on the cash planning. With this treatment company will be able to maintain cash always on the sufficient level.

3. Cash Control

Cash disbursement should be recorded appropriately. Inappropriate cash record will not reflecting the actual operation. Therefore, an accurate and valid record should be maintain consistently.

Cash record should be reviewed and reconciled periodically. This role will give a good opportunity to the management to catch and prevent some erroneous or fraud in the cashing area.

Cash management is the most critical role of financial control. Poorly cash management will prevent company to achieve the objectives and lead a business suffered.

Related Topics : Petty Cash Tips, Petty Cash Reconciliation, Checking Account Tips, Checking Account Reconciliation

Related Tools : Petty Cash Spreadsheet, Petty Cash Reconciliation Sheet, Checking Account Spreadsheet, Checking Account Reconciliation Sheet