Cash flow issues present one of the greatest challenges to business owners. It is estimated that 4 out of 5 business failures are a result of poor cash management.
How do you ensure you have enough cash to pay for bills that are future transactions and not recorded as a bill from a vendor (i.e. payroll, rent, etc.) Business owners must be fluid in thinking when cash is concerned. Cash management is critical when answering questions regarding operations and growth:
Why is cash on hand so elusive and evasive to the small business owner? It’s all about Days Cash on Hand or DCOH. Days Cash on Hand is the number of days that an organization can pay for its expenses based on the amount of cash they currently have available. Simply, DCOH:
Calculated as follows: DCOH = (operating expenses – non-cash expenses) / 365. However, this only shows what the DCOH is for a period. More importantly, how does a business know what today’s DCOH is? To find this out, you need to calculate your available cash (after checks in float) and subtract your current unpaid expenses. This is very challenging, and businesses typically utilize a manual calculation, create using a spreadsheet, or estimates.
But what if a major receivable is late or a critical piece of equipment dies, and you must rent one to complete a job or project? You need to recalculate that DCOH and we mean but quick!
This critical process is often put on the back burner. Unpaid invoices and large balance for receivables can single handedly squeeze the life line from your business.
We do. Hire Carly! Simply download the application, connect to QuickBooks and your financial accounts, setup your users and you’re ready to go. Carly will start automating your bill payments, cash flow projections, notifications, and a host of other bookkeeping tasks. Carly thinks and acts like a bookkeeper – only smarter, faster, less expensive, and more secure than traditional bookkeepers. She can even run what if scenarios!
Understanding your cash flow can be easy. We can show you how! Let’s talk.
Expex is based in Schenectady, NY offering convenient and innovative bookkeeping services to help your business succeed. Our application, Carly, can do everything a traditional bookkeeper does and more. This financial management program expertly fulfills services such as bills payments, bank and credit card reconciliation, and financial records consolidation. Call (518) 389-2305 today to get started, or contact us to learn more about Carly.