Risk Running Out of Cash Unless You Follow These Principles:
This week I was working with a rather large company with multiple locations. Strengthening the controls over cash deposits and available cash was the goal. The timing of actual cash deposits varied since the company accepts cash, credit cards, third party financing and sales on credit. Reports were developed to clearly account for all sales daily and the deposit of cash daily. We then refined our controls.
The key objective was to measure and report available cash. This is cash in the bank that is available for disbursement. Many companies do not measure this number daily and if they do it is often measured incorrectly. The number one mistake is to ignore some or all of the disbursements that have been made that have not cleared the bank. Another mistake is to assume all cash is deposited when due. For example, deposits from credit card sales generally take approximately three days to be recorded in the bank. Deposits made from a remote location are often made using night depository, Those deposits are physically in the bank but often are not visible using on - line banking until the second day after the night deposit. All of these timing differences must be taken into account in calculation available cash.
My business (Exec Net Consulting www.ExecNetConsulting.com ) teaches clients how to improve the controls over physical cash and reporting cash availability. Of course that is the first step in the process of forecasting cash positions and strengthening cash.
I apply these principles to my own business. My firms expertise spans numerous industries. Most of our experience is with retailers, manufacturers, and trucking companies. I have already developed a spin off of my main web site www.ExecNetConsulting.com for the trucking industry. That site is www.TruckingCompanyConsultant.com I have several more in development recognizing our expertise in a number of other industries. On the drawing board is a further breakdown of our retail expertise as it applies to drugstores, restaurants and apparel.
All the best,
Steve Pohlit, President
Exec Net Consulting