Cash Flow Management Tips

Cash flow

Cash Flow Management Tips and Suggestions

A lack of financial management information and expertise is probably the single most common factor that causes otherwise successful organizations to run into difficulties. Here are some of our top cash flow management tips:

Make sure you have access to timely and accurate financial statements and know how to use them.

Ensure that you have access to timely reliable financial information and the knowledge to use it. This includes analysis of cash flows and may mean monitoring your cash flow forecast daily.

Accept electronic payments.

The benefits of accepting electronic payments include timely payment of outstanding receivables and eliminating the risk of cheque payments being dishonoured due to non-sufficient funds. Accepting electronic payments also ensures that funds are deposited automatically into your account without having to make bank deposits.

Monitor collection of Accounts Receivable.

The longer a receivable is past due, the more difficult it can be to collect. It is important to monitor and stay on top of the collection of your receivables.

Have a line of credit in place and/or consider alternative financing vehicles.

Situations may arise where you need a source of cash. A smart business practice is to have a line of credit in place or alternative sources of financing identified. The time to do this is before the need arises.

Keep an eye on expenses.

Too many organizations have run into difficulty due to runaway expenses. It is important to monitor your expenses regularly to contain them and identify potential opportunities for savings.

BONUS TIP – Monitor your pricing for loss situations.

It is important to monitor your pricing for potential loss situations. One approach would be to group customers in buckets:
A – High margin customers
B – Low margin customers
C – Loss situation
For low margin customers, look for opportunities to increase pricing and/or reduce production or service costs. Customers in a consistent loss situation should be eliminated.

We recently presented 20 tips and suggestions to improve cash flow management to a group of social entrepreneurs at Invest Ottawa – if you want to see all 20 tips and our presentation, Click Here.

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Francis Liska
CEO OTUS Group | OTUS Group
Francis is a Chartered Professional Accountant, Certified General Accountant, Certified Information Systems Auditor, Certified Internal Control Auditor and a Certified Management Consultant. He holds a degree in Business Administration from Cape Breton University and a Post Graduate Diploma in Applied Information Technology. He has also completed graduate studies in decision analysis at Carleton University.

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