Small businesses often lack the expertise to set up sound cash-management systems and to monitor their effectiveness as needs change with growth. (See "Five Signs of a Snafu," [Article link].) To learn how entrepreneurial companies view cash management, Inc. interviewed a trio of financially savvy executives:
Opting Out: Tomima Edmark, president, the TopsyTail Co., Dallas. "Banks can make you crazy. When we were shopping around for a bank, they'd look at our seven-figure balance and nickel-and-dime us over everything. So I set up our corporate savings and checking accounts at IBM's credit union, which, as a former employee, I belonged to. Now I pay a low fixed monthly fee and earn 3.5% interest on our savings. But I maintain a growth-investment portfolio at a regional bank's trust department, because I want an established relationship in case we need to borrow money."
Toughing It Out: Patrick Duffeler, president, Williamsburg Winery, Williamsburg, Va. "The largest problem is the lack of time to devote to these issues. I'm a veteran of a large corporation. There, they'd just hire a treasurer who specialized in cash management. At a small company, you can't devote the time it takes to manage cash well."
Working It Out: Cheryl Goodrich, chief financial officer, Displaymasters, Minneapolis. "Our CEO and I are probably in contact with our bankers several times a week, but that isn't enough. You have to deal with proactive bankers who are committed to finding ways to help you expand your cash-management system as your company expands. Here's an example: We were doing our payroll internally, but our bankers said we were ready to think about using an outside payroll firm. When we did the analysis, not only did it make sense from a cost perspective, but now it's one less reason to have to worry about transferring cash between accounts."* * *