LESSON 34: Common ways of controlling cash – and why th Articles

LESSON 34: Common ways of controlling cash – and why they don’t work

You know how critical it is not to run out of cash. Virtually every business owner on the planet has at some time experienced the sickening feeling in the pit of their stomach when they think their cash may run dry, if even for just a few days or weeks. Visions loom of awkward and […]

34.1 Controlling your cash by looking at your bank statement

 Not surprisingly people often monitor their cash position by looking at their bank statement. This is particularly true if they are in cash difficulties, or are concerned about their cash. This approach to cash management is quick and easy, but can be very dangerous, and it provides almost no ability to manage your cash position. […]

34.2 Controlling your cash by looking at your accounting records

 If you look at your accounting records you will get a better idea of where you stand – with the caveats that your records must be kept right up to date, and that they are free of significant errors or omissions. Under those conditions your bank account as written-up in your accounting records will show […]

34.3 Controlling cash by looking at your Balance Sheet

 You will find it easier to see the various relationships between what is due to be paid and what you are due to receive by looking at your Balance Sheet. Also a properly drawn-up Balance Sheet will include an estimate of amounts due for which you have not yet received (or issued) invoices. However whereas […]

34.4 Controlling your cash with traditional cash flow forecasts

 When businesses look ahead at their future cash position they often do it with a conventional stand-alone cash flow forecast. Normally this will extend for six to twelve months, but most attention will be paid to the initial eight to twelve weeks. This conventional approach to cash management is an extremely useful exercise. Cash is […]