Cash Management: It is essential for small business or large business entrepreneurs to manage its cash volume to meet their short term and long term business needs. Every business has some day to day expenses like courier and printer expenses, stationery expenses, travel expenses, tea & coffee expenses etc. these are short term expenses. On the other side, expenses incurred on fixed assets, machinery etc. is long term expenses. Hence it is required to maintain some petty cash in hand to meet such day to day requirements. On the contrary, every business has some revenue on a daily basis which is to be collected in cash. Therefore the cash collected is to be managed efficiently to meet the cash expenses.

A firm is said to have a high liquid if it has sufficient amount of cash in hand for its day to day operations. Whereas short of money is a big stigma to any firm. It is advised for any business to maintain proper balance between cash inflow and cash outflow for its long run operation. It is because short of money which will impact overall purchase and ultimately affects the company sales and service. Also less liquidity will also have direct effect on company’s day to day expenses and will also make management to think for reducing manpower, cost cutting compromising with quality of company’s products and services.

On the other hand, if we talk about excess funds or excess cash, it would increase company’s expenses and will lead to mishandling that will ultimately hamper business growth. Hence it is essential to have proper balance of cash flow. Such cash flow when recorded in QuickBooks help any firm to manage their cash effectively.

What is Cash Management in QuickBooks?

Cash management is a process of managing cash inflow and cash outflow in QuickBooks in such a way that cash liquidity of business is neither excess nor less so as to ensure meeting all the business operations effectively. We can say it is a working capital of company by which it is ensured that any excess cash if available is to be reduced and utilizing the available cash so as to meet unexpected expenses as well.

Basics of Cash Management

There are some basics which need to be followed for any cash management to function. As said earlier it is a process that needs to be handling carefully by the right person, at the right time and at the right place.  It doesn’t require any well defined rules but some strategies that were designed after

• Cash Planning and Cash Budget
• Management of Cash Inflow and Cash Outflow

1. Accounts Receivable Management
2. Accounts Payable Management

• Optimum Cash Balance
• Investment Optimal Cash

What are the strategies for Cash Management?

Strategies to Cash Management are some of the scientific based methods that help in managing the cash effectively. In this article we have discussed each strategy in detail. You can choose these strategies in your business for its smooth functioning in a long run.

• Cash Collection Policy

Your account receivable balance could be increased and properly balanced if you enforce a formal cash collection policy to it. In QuickBooks software, you can keep record of each and every issued invoice. The QuickBooks WorkForce will help you organize the issued invoices date wise so that you can easily monitor the payments due in current month. You can also keep an eye on pending bills that need to be clear. It will help you make regular follow ups and make easy for you to reduce outstanding payment by contacting customer through calls and emails. Thus a cash collection policy would basically serve the purpose of managing cash inflow.

• Customer Discounts on Early Payments

It is one of the good strategies to maintain the cash flow. You can offer some percent of discount on the raised bills if customer makes payment before the due date. There is no doubt it will affect the sale but no doubt it will also promote chances of getting fast payments which will help you avoid borrowing money and paying higher interest rates. However giving 2-3% discount will be a good deal to save 10-12% of high interest rates on borrowed money. The payment so collected can be used further for executing other orders and meeting business day to day operations for generating further income.

• Inventory Management Strategy

In order to take your business to a long run, you must have to understand the customer and market requirements well in advance. You must need to keep an eye on stock available and market demands based on the current scenario. A good vision is required to manage the demand and supply of goods to the customer. As ready to deliver material will promote the cash inflow otherwise unavailability of goods will reduce or delay the number of sales orders that will ultimately affect the company’s account receivable.

• Tech Based Management

In any business, cash can be collected faster with the use of technology. We lay emphasis on using software that facilitates transferring payments online directly to the company’s account. Of course, it will take one time investment but promotes cash in inflow and avoid manual accounting of making payments.

At last we could say cash management requires your valuable time and intelligent efforts. But it is very well said Hard works Pay Off.