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36
ACCOUNTING

Monitoring Daily Cash Trends

Daily tracking cash that leaves and enters your company.
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Some owners of growing companies have difficulty focusing their attention on the minutiae of cash-flow accounting. Not Susan Bowen, CEO of $9-million Champion Awards, a Memphis T-shirt screen printer. She has simplified monitoring cash flow by creating a process that tracks the cash that leaves and enters her company each day. By balancing the two cash trends, she says, "I've tried to balance my books every single day since I started my company, in 1970."

With an emphasis on keeping the procedure simple and efficient, Bowen sets aside time early each morning to track updates from the previous day on four key numbers:

* Accounts receivable: (1) What was billed yesterday? (2) How much was actually collected?

* Accounts payable: (3) What invoices were received yesterday? (4) How much in total was paid?

On days when Bowen detects the wrong kind of trend -- more new bills than new sales, or more money leaving the company than was received -- she makes immediate adjustments. "I will get on the phone to my sales department and raise its daily quota," she explains, "or I'll decrease the company's purchases of items like office supplies." Another, longer-term option is to increase the company's collection efforts by aggressively contacting overdue customers, with the goal of bringing more cash into the company quickly -- within the next few days if possible.

To Bowen, the bottom-line results are more than worth the 10 minutes or so it takes her to balance her books each day. "The last thing I want is to have to wait until the end of the month to know if I'm losing money." -- Jill Andresky Fraser

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Last updated: Oct 1, 1992




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