What is the most important asset on the balance sheet in terms of running day-to-day operations? That’s right, it is cash. Cash is the heart of every business, and every company needs cash to pay suppliers, employees, contractors, purchase equipment, etc. What are some of the best practices in cash management?
Monthly Budgeting is Key
The first and probably the most important step you can take to help you control and manage cash is to develop and review budgets on a periodic basis throughout the year. How would you like to realize one month that you don’t have enough cash available to pay your employees because you did not budget your monthly cash receipts and expenses, and you purchased an expensive piece of equipment in the beginning of the month? Monthly budgeting allows you to control and predict cash ins and outs and see how much cash you will have at the end of each period.