It took losing my seed capital to understand the statement “Cash is king “.
My very first business involved making supplies to companies,items supplied were taken on credit with a 2-3 week timeline for payment , most of the companies always defaulted.It took them as long as 3 months to pay up ,in some cases then, i made multiple supplies to the same company on credit . The delays never bothered me , at that time i was trading with sufficient funds so i simply treated it as a case of outstanding debts.
After a while it became difficult to expand the business, serve the few companies that paid on time ,it also became almost impossible to pay the bills within the business.
|photo credit : www.gtmediaproductions.com|
Cash management is important to every business.The consequences of not understanding cash management in business can be disastrous, i learnt this the hard way. In few words, a business that is out of cash will most likely be out of business.
Personally,the 3 cash management habits i consciouly practice are
– paying attention to all my costs and expenses
– closely monitoring turnover and avoiding credit sales ; in my kind of business,the margins are low so its all about volumes and rate of turnover)
– collecting and evaluating data regularly; this basically lets me know how my business is doing and how to effectively focus to earn more money
Here are 3 posts to give you a good understanding of cash management in business
1) Dealing with cash flow problems in business https://biznessvirgins.blogspot.com.ng/2016/06/business-clinic-dealing-with-cash-flow.html
2) Cost management tips for SMEs https://biznessvirgins.blogspot.com.ng/2016/06/money-management-tips-for-smes.html
3) Understand basic business terms for book keeping https://biznessvirgins.blogspot.com.ng/2016/06/money-management-tips-for-smes.html
F.O is in business to make money and F.O bears this in mind always – CASH IS KING
F.O (The Entrepreneur)