![]() ![]() Of course, cash flow projection/management must be used in conjunction with a proper collection policy and procedure. Conditions can be somewhat foreseen, and planned responses can be had. In other words, checks don’t just show up in the mail, and a company doesn’t just happen not to be able to meet payroll this week. If a business embraces this philosophy, then a system of planning when bills can be collected and paid can be devised and utilized to take guesswork, or perceived Providence, out of the equation. The basic philosophy of a cash flow system is that things don’t just happen in a business, they can be influenced and controlled. It demonstrates to lenders that management is informed as to the financial requirements and has planned to meet the company’s obligations.It indicates the need to step up collections activity if accounts receivable payments are lagging.It provides a plan for payments to creditors that are balanced with receipts. ![]() It shows management when a surplus of funds will be available for things other than operating use. ![]()
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