Big Picture - August 2016 - (Page 16)

business + management Overseeing Your Daily Cash Flow How to be more effective in the cash management process. | by Marty McGhie M anagers in today's business world have many areas of responsibility: sales and marketing, general business expenses, employees, equipment, and physical facilities, to name a few. But perhaps the most critical item to manage is your cash. Ironically, managers can sometimes ignore major steps in that process. Simply put, there are two types of cash flow that affect your business: cash coming into the company and cash going out. Your business has more control over the cash going out than the cash coming in because, to some extent, you get to choose when you send out the checks. But controlling your accounts payable to the point where you don't send any cash out to meet your financial obligations probably won't work out that well. The problem is that many businesses spend much more time managing cash going out of the business and can, at times, ignore the focus on getting the cash into the business. So, what can you do to bring money in? BIG PICTURE August 2016 COMMUNICATION IS KEY Your incoming cash will most often come from outstanding customer balances. Communication with your customers regarding their outstanding accounts receivable can be tricky. You have to be firm enough to make sure you're going to get paid, yet careful not to offend your clients. (You'll want to continue your business relationship with them, after all.) Here are a few ideas to consider in your collection efforts: * Begin communicating early in the process. Avoid waiting to initiate correspondence until a balance is 60 to 90 days due. Consider grouping invoice amounts into separate categories such as invoices under $1000, between $1000 and $5000, between $5000 and $10,000, and greater than $10,000. Then, manage these groups accordingly. Perhaps invoices under $1000 don't require a communication until they are 60 days out. On the other hand, an invoice greater than $10,000 could merit an email or a phone call right at 30 days to serve as a gentle reminder that this particular invoice is now due. It might also include a request for clarification if there are any questions regarding the invoice. You'll want to establish protocols that fit your clients and their terms, but you need to manage your larger balances with higher priority. * Stay on top of your invoicing. Don't wait until the end of the month to begin processing invoices and sending them to your customers for work completed in prior weeks. Your customer's payable dates will begin once they receive the invoice, so you're only costing your business valuable days of cash collection when you don't send them promptly. * Cover your bases. You may consider setting up a backup system with your clients that enables them to receive both a hard copy and an electronic invoice. Ensuring your invoices are being sent to the proper person is also critical and can save precious time in getting paid. MARTY MCGHIE is VP finance/operations of Ferrari Color, a digitalimaging center in Salt Lake City, San Francisco, and Sacramento. He is a partner and director of Signs.com. marty@ferraricolor.com 16 http://www.Signs.com

Table of Contents for the Digital Edition of Big Picture - August 2016

Big Picture - August 2016
Contents
Insight
Wide Angle
Upfront
Business + Management
Dynamic Signage
Touching the Future of Print
How I Got the Job: Sino Tour
RIP It, RIP It Good
R+D
Job Log

Big Picture - August 2016