Cash flow management can seem intimidating for small business owners. As Inc. magazine explains, the process of managing cash flow involves collecting payments, controlling disbursements, forecasting cash needs and more. In addition to entrepreneurs themselves, it also requires the input of tax and accounting staff.
Cash flow management is always an important part of business operations, but it's especially important to make sure every available dollar is being put to work amid periods of economic uncertainty. The news source put together a list of best practices for entrepreneurs looking to stretch every dollar as far as it will go.
First, companies should select core cash management banking partners, such as a community bank like My Bank. A study from Raddon Financial Group's National Small Business Research found that satisfaction rates among business owners with accounts at community banks were considerably higher than those using a big-name financial institution (45 percent compared to 32 percent).
Developing accurate cash forecasting models is another crucial part of cash flow management. Forecasts can be based on seasonal, cyclical, monthly and even daily patterns, and divided into short-term, medium-term and long-term. Work with financial services advisers to make sure your forecast is as accurate as possible, even in the face of cash flow uncertainty.
In order to improve your investment yields, put together a clear investment policy in writing that outlines your objectives, guidelines and criteria. Seek financial investment advice and be mindful that what worked for other companies might not necessarily be the best course of action for yours. For example, the news source notes that while managing an investment portfolio in-house is the best way to maximize opportunities for some businesses, outsourcing might be preferable for others.
Once you have a system in place, it's imperative to review it regularly. This will help determine how existing processes can be improved and will also be beneficial when it comes to establishing a tracking metric. The media outlet advises focusing on processes affecting the cash-to-cash cycle.
Whether you're looking to set up a cash flow management system for the first time or simply augment a current one, My Bank is ready to help. Give us a call at 1-888-mybank4, check out mybank4.com or drop by a branch anytime.