Importance of cash management in a business.

[Ephy]

Importance of Cash Management in Business
It's important to remember that startup funding is a type of loan. Unless the money is expressly given as a gift, you're expected to pay it back to the lender, whether through direct payments or profit-sharing. Carefully managing your income and expenditures in the early stages of your business ensures you can afford to repay the loan.

After you pay off the startup funding in full, that same careful cash management keeps your business afloat. You may be able to obtain additional business loans down the road, but you'll often need to demonstrate that the funds will be used to develop a new product or project that will generate additional income. Lenders do not want to throw money at a sinking ship.

It's smart to hire a business accountant to organize and update all financial records and transactions. Collaborate with your accountant to generate expense reports and identify cost reduction opportunities. An accountant can also create financial reports that allow you to track your business's income so that you can strategize accordingly. For example, a dip in sales might require a fresh marketing push.

 

[Alexandoy]

Cash management is indeed important whether the business is small or big. For small businesses the usual issue is the cash flow. That is one reason why they cannot pay the suppliers on time and they are always asking for extension of the credit period - the cash flow is very tight that they have to wait for the payments of the major clients. I experienced that when I had my retailing business that our clients would request for an extension when we drop by for collection of their pending payments. Sometimes I blacklist the client and we do not get orders anymore unless they pay up their balance.

 

[Carpon]

Cash management is a skill and ability that is pivotal in the sustenance if a business. It is this skill and ability that helps you when budgeting and planning what business plans to execute and the amount that should be wielded to that.

Another Importance of that is you avoid wastage of funds and improper or unwise usage of funds. When you have the skill on how to properly manage cash, you won't be found mismanaging cash leading to wastage of funds which ultimately will have the long term effect of crippling your business.

Another usefulness of the cahs management skill in question is that your business will discover more profit. This is a long term effect that this particular attribute has. When you manage cash properly, overtime you will find out that your business profit will increase.