Tag Archives | collections

How to Develop a Daily Cash Report

Learn how to develop a daily cash report in today’s blog. Use the Daily Cash Report to report on the daily cash balance and to help manage cash on a weekly basis. This tool is especially useful when entering a situation where active cash management is required for your daily cash flow. The daily cash report template is used best as a tactical, active cash management tool. Knowing your daily cash position as well as your weekly cash commitments will give you added impetus to collect money and/or to generate revenues.

How to Develop a Daily Cash Report

Why use a daily cash report? Often CFO/Controllers when facing a cash crunch manage cash by reviewing the online bank balance. Though easy to do this number is not accurate. It does not take into consideration outstanding checks. Another symptom of a cash crunch is that accounting falls behind in processing information. By preparing this daily cash flow forecast or projection you force the accounting department to stay current with posting transactions.

This tool is also helpful when used in conjunction with the Thirteen Week Cash Flow Projection. It is helpful to think of the 13-Week Cash Flow Report as giving you the strategic big picture needs, while the Daily Cash Flow Report provides a more tactical level measure of your firm’s cash position. You can tie a week’s worth of cash receipts and cash disbursements as reported in the Daily Cash Report to the 13- Week Cash Flow Report….

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For more tips on how to improve cash flow, click here to access our 25 Ways to Improve Cash Flow whitepaper.

How to Develop a Daily Cash Report
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How to Develop a Daily Cash Report

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Who Is Swimming Naked In Your Back Yard?

Warren Buffet has a saying that goes as follows…

“You never know who is swimming naked until the tide goes out”.

This past week there have been two major businesses who have been exposed as having been “swimming naked”. The major blow up was the investment manager Bernard Madoff, founder of Bernard L. Madoff Investments Securities LLC, to the tune of $50 billion. The other scandal was the lawyer Marc Dreier in New York for $280 million.

Both of these individuals were assumed to be the pillars of their profession and financially secure. In fact, both were big frauds waiting to be exposed. It was only after the financial stress of the past year caught up to them that the world discovered the truth. More to the point the only reason you heard about them is because they were large enough to make it in the Wall Street Journal.

Who Is Swimming Naked In Your Back Yard?

The real question going through your mind should not be about what they did or how they did it. But, instead you should be asking yourself is either:

Who in your community is doing the same thing or something similar?

Or who is swimming naked in your business community?

Often, what we see of people or businesses is only surface deep. I have know several individuals and companies over the years who appear successful on the surface but in reality they don’t have the financial strength to weather a shock to their systems. As this recession takes hold across the country we are going to see who has been fiscally conservative and who has been living on the edge.

As a business owner or CFO you need to be concerned about which receivable is going to be uncollectible. You can rest assured that somewhere in your accounts receivable ledger there is a bad debt that has not been exposed. Now is the time to tighten up your underwriting requirements and collect your old receivables.

To learn more financial leadership skills, download the free 7 Habits of Highly Effective CFOs.

who is swimming naked
who is swimming naked

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Financing a Startup

Recently came across an article in the London Times about how to approach financing a startup or new business. Overall it’s a pretty good summary of the basic dos and don’ts. Do know what you can do without today. Negotiate with your suppliers so that you can get better terms on your payables, such as a longer payment period and/or discounts. Don’t take on an equity investor unless they bring something to the table which is absolutely crucial (other than money).

Financing a Startup

One item mentioned, which has been problematic for even my established clients has been the timely billing of customers and collection of accounts receivable. How much working capital are you financing due to large A/R balances? For most startups, poor billing and collections can be a killer combination. For all businesses, it can be quite expensive to continue to finance customers for months after a purchase. Know your accounts receivable turnover. Track it. If it is low or declines over time, find out why. Seek to improve the timing of your collections. Provide your staff with incentives for reducing your company’s days sales outstanding.

Many entrepreneurs focus on profitability (which is important) but neglect monitoring and managing their cash flow. It is important as the financial manager of a startup or smaller company to watch your cash flow like a hawk.

For more tips on how to improve cash flow, click here to access our 25 Ways to Improve Cash Flow whitepaper.

Financing a Startup

Financing a Startup

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