Cash management is either the most important aspect of the small business or one of the most important. Quality understanding of a small business’s cash position allows the small business owner the luxury to properly plan, budget and make decisions for small business. This understanding normally comes from complete and accurate financial statement production, and subsequent review, provided by the accounting service provider. Contact your accounting services provider so that make sure to properly reconcile all of your cash accounts, accurately enter transactions and produce complete financial statements for your review.
The job properly reconciling the cash accounts for the small business is critical. This process is the basis for all review and/or edits of monthly transactions; whether the transactions are income, expenses or balance sheet transactions. The business owner and accountant use the cash account reconciliation to find and/or catch errors and needed adjustment. This will ensure the proper review, analysis, and understanding of the cash position of a business. The cash position of a business establishes the future and present value of the business, along with the ability of the business to survive and/or grow.
Of course, the only way the reconciliation’s can be proper when complete is to have accuracy in the data entry process of the business’s financial transactions. Accuracy in the data entry process is the first stop in helping a small business owner understand their cash position.
Once the cash account is reconciled, adjustments have been made on the accurately entered transactions, financial statements can be produced and provided to the owner. These financial statements, specifically the balance sheet and cash flow statements, allow the owner to see understand exactly hour their cash positions have changed for the period of time in question.
All of the things provided the business owner with information to properly plan, budget and make decisions for the business. Planning normally is a short-term view on the business and knowing the flow of cash helps the business owner properly plan. Cash management also is important when budgeting for the business, which is more of a long-term view on the business. Both the planning and budgeting for the business allow the owner to make decisions impacting the business without negatively impacting cash flow.