“Cash is king” is an important expression used in analyzing business and making investments. Cash is the lifeblood of a company. It is one of the most important aspects of any business. It is due to this aspect that a company can be bankrupt or profitable. It is therefore, effective cash management is important to run the business in an effective and efficient manner. Below are some important tips that might be helpful in managing your money effectively.
Managing your money effectively entails preparing cash flow budget on regular basis so as to determine the accurate cash movements. Preparing cash flowbudget helps you project your cash inflows and outflows in an effective and efficient manner. It is with the help of cash flow budget you can ensure all the expenses that incur, are being paid on time, while the revenues are being managed efficiently.
One of the most important things to manage your money is to control your expenses. It necessitates monitoring the expenses on regular basis. You need to ensure that your business does not incur unnecessary expenses and they are paid on timely basis. It is also important to analyze the need and determine where the money is being used in excess. As far as possible, you need to keep track of things on which your money is spent.
Another important aspect of managing your money in an effective manneris managing your receivables effectively. It involves maintaining accounts receivable aging schedules and making collections accordingly. It must be noted that accounts receivable aging is a report that shows the amounts owed to the company by its customers or clients. There are various ways in which you can manage your receivables efficiently, such as, designing and implementing credit policies, maintaining credit terms and standards etc.
It must be noted that a sound accounts payable system aids you greatly in monitoring money and maintaining it properly. Accounts payable activity is concerned with the outflow of cash. It is to maintain liability accounts. Maintaining accounts payable helps you in determining how efficiently accounts payable obligations are being planned and managed.
K.A.Fareed (Fareed Siddiqui)
Writer, Trainer, Author, Vba/Vb Developer
BBA; MBA-Finance; M.Phil-Financial Management; (PhD-Management)
Individual Member of Institute of Management Consultants of India
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