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.

Future Transactions

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:

• I like to run with 30-45 days cash, what does it look like if I add future transactions?
• Can I afford to add a new employee to manage our growth?
• Can I upgrade my office equipment and be ok carrying a bit more debt?
• I would love to save a little interest expense. Can I make a principle payment this month?

Cash on hand

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:

• Is critical for businesses that operate without a large amount of cash.
• Can be affected by customers who slow their payments down.
• Can also be affected by large purchases.

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!

Past Due Receivables

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.

• Be aware of your A/R and be proactive with collections.
• SMBs rarely levy late fees and penalties, making your invoice last on their A/P. Be clear with your customers about your payment terms and do not be afraid to put them on hold or another form of retribution.

Who has the time to do this?

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.