Money management in small business

Money involves all financial transactions with physical cash or used by businesses. It is part of current assets of a company. Cash management process for a company applies in three respects. First, the provision of adequate capita. Second, the use of working capital. Finally, acquisitions and investments. However, cash or money management also can be seen in terms of periods of long-term financing or short-term financing.

 In managing the survival of small businesses, cash on hand and cash in the bank, which is basically the most liquid of all assets, should be put to good use for maximum benefit to the organization. However, there is no particular advantage in having thousands of dollars in the safe. Simple possession only futile effort.

 Proper and sufficient money management to small businesses are very important for the growth and development of the company, as the size of assets is used profitability.

The elements involved in the management of money for a small business should include:

  1. Cash Planning: This involves planning the inflows and outflows of cash business.This is often referred to as a cash budget or cash forecast for all operations. This makes the control of cash becomes possible to prevent future shortages of cash.

  1. Cash Flow General: This is adequate and appropriate management of receipts and payments. To succeed in managing the cash flow of the business, companies must adopt the principle of “collect all receipts in the shortest possible time and delay payments to the last minute.”
  1. optimal cash rate: This involves determining the appropriate or optimal level of cash balances to balance the cost of carrying cash to the dangers of excess cash shortage.

. The success of many small businesses today can be attributed to effective cash management. Statistics show that the origin of the funds from banks or other financial institutions, effective money management is a fundamental requirement to ensure approval.