By Ruth King
The old saying was that cash is king. Now, in this era of quarantines and stay at home orders, cash is even more important. Cash is now emperor!
Here’s how you can generate cash today:
Go through your proposal files. Unfortunately many sales people give a customer a proposal and either never follow up or only follow up once. Many times the customer has not bought from anyone. He is waiting to hear back from a salesperson.
One of my clients laid off his salesperson and started going through his files. He made many telephone calls and within a day uncovered $80,000 of work that the customer said yes to! Many people told him that “we never heard back from anyone.” Follow up – even if the proposal is old.
Next, watch your cash:
Every day log on to your bank account. Make sure there is are no things that you don’t recognize. Look at deposits, checks, and ACH withdrawals. Do they make sense? If not, start digging.
The bookkeeper for one of my clients noticed two deposits, each less than $1. He assumed the owner was setting up a new account and didn’t think to ask him about it. The next day the bank called and asked whether they had authorized a $50,000 withdrawal from their account! Obviously, they shut down the account immediately. If something doesn’t look right, question it immediately.
Every week have your bookkeeper (or you) prepare a weekly cash flow report. This report shows you the movement of cash through your business. It starts with your cash on hand at the beginning of the week, collections from sales and other infusions during the week, and what you wrote checks for during that week. This gives you your ending cash for the week.
Then the report estimates collections the following week and payments due the following week. Add collections to the ending balance and subtract payments. The result should be a positive number meaning you still have cash at the end of the next week. If not, decide who isn’t going to get paid or whether collection calls need to be made. Email me (firstname.lastname@example.org) if you would like a sample weekly cash flow report.
Cash is no longer king – it is emporer. Watch it closely.
Ruth King is known globally as the “Profitability Master,” and is a a thought leader in entrepreneurship and business. Her books have been recognized as among the greatest in numerous industries. Learn more about all her business activities here.