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They Say Cash is King

They Say Cash Is King

True?  We think so. Cash allows a business to run and supports growth with its ability to hire new employees, purchase goods and services more competitively, and pay bills within terms to save a percentage or two.

If this is indeed true, then 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.

How it is calculated?

Calculated as follows: DCOH = (operating expenses – 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!

Who has the time to do this?

We do. Expex provides you with a tool that does this and gives you clear insight into what your DCOH is every day by reconciling your available cash, checks in float and current unpaid expenses. We even give you the ability to run what if scenarios.

C’mon, contact us and relax, we got this!

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