The hardest part of cash management is in forecasting the amount of money coming available for disbursement each week. For practical purposes, daily cash projections are too often and will rob you of quality time that could be used to improve the quality of your cash. Cash quality equals profits. Cash from profits is the cash that matters because it’s the cash that you get to keep, not the cash that flows through your business.
Overview
For businesses that are 100% reliable on the weather, their management teams are inclined to monitor the weather forecasts throughout the week. Knowing what the weather is likely to be during the week enables them to adjust their work plans based on weather changes.
Unfortunately, the challenge for every business lies in the timing of cash coming in and cash going out. For those with low cash reserves their business is 100% reliant on their ability to forecast their cash inflows to they can meet their cash outflow obligations.
The problem for too many business owners is they will spend more time during a week looking at the weather forecast than they will in forecasting the cash position for their business by week for the next two weeks. Don’t be one of those business owners who approach each week in your business without a cash forecast. Knowing your week-to-week cash position is the best way to manage your business for profits with cash reserves in the bank.