Make Sure Your Business Has More Than Enough Cash To Do Its Job

INVOICEHow you manage your financial resources directly impacts how long it will last. It does not matter how large or small a company you run, the truth remains the same. Healthy cash management leads to a sustainable business. Here are a few ways to get it done right.

Keep an eye on the balances on your clients accounts. When offering terms on credit, a good place to start is with a written payment policy. You can have the terms on a separate form that the client signs or add it conveniently on the invoice. This lessens misunderstandings between you and the customer by stating the terms of payment up front. Policies should clearly outline the date payment is due, what form of payment you will accept, interest rates or late fees when payments are late, and where to remit the payment. If you have a merchant processing account set-up then clients will be able to pay you online.

A simple way of tracking outstanding client invoices is by using a report called the Aging Summary. If you are using a computer accounting software like QuickBooks, for instance, you will find it in the Reports List. However, it is also simple to do using a regular sheet of notebook paper or a spreadsheet to create your own. The major information that to have is:

  • Customer’s Name

  • The total amount that you billed them to-date

  • The amount they still owe you

  • The dates the amounts are due

I have put together an example of an Aging Summary for you below. From here you can see if the client is current or if their payments are behind. Two major benefits of using this report is to follow-up in a timely manner and to know how much cash you will have available and when.

CLIENT

Current

1-30

31-60

61-90

91 +

TOTAL

ABC, Inc.

15,000

2,000

1,350

18,350

In the same way that you track the cash that comes in, you also need to track the cash that goes out. You can do a similar schedule for bills from vendors. The difference will be swapping out client information for vendors instead. A vendor summary will show who you owe, what the current amount due, and bill payments that are behind. Try to stay on top of your vendor payments so that you avoid late fees and stay in their good graces.

Together these two reports can play an important part in your business financial success. With a realistic view of who owes the business and who the business owes, you will be better prepared to manage funds with confidence.

Here’s to smiling at your future!

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2 thoughts on “Make Sure Your Business Has More Than Enough Cash To Do Its Job

  1. Great suggestions!!! and one thing more… make sure your body is clear of all scarcity energy! That made a world of difference for me 🙂 Stopping by from UBC. Great post today!

  2. Great Tips! Including some personal testimonies is always a great help for readers! Blessings to you!

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