Three rules for managing cash

 

  Accounting journal shows how much cash an entrepreneur have on hand. You can be running a profitable business but still be insolvent if your cash balance (receipts minus disbursements) become negative.  In order to avoid getting caught, without enough cash to pay your bills. These three rules are for you:

i.                     Collect cash as soon as possible. As you make a sale, try to get paid on the spot.

ii.                   Delay paying bills, as long as possible, without irritating the suppliers. Most of the bills, come with due dates. The phone bills, for instance, is typically due within the period of twenty-days. Make sure you will never pay any bill after the date due, without getting permission from the suppliers.

iii.                  Try to know all your cash balance all the time.

                  

Your account must be current:

      As your accounting journal is being kept daily, running your business will be easier. After the end of each week, you may want to enter the information from your daily journals into a weekly ledger.

   However, a ledger is a collection of all the accounts of a business, including sales, cash, accounts receivable and sales tax due.  Posting the accounting information from your daily journals to ledger once a week will give you a good overview of how your business is performing.

    When an entrepreneur is keeping good accounting records on a daily basis, he will be able to prepare monthly income statements and ending balance sheets. As you are making these income statements, it will help you make good decisions for your venture. For a business to strive, good accounting practices will help you to keep track of your cash, too. Entrepreneur should all the time know the cash balance.  A business conscious person should learn how to keep good accounting records; it will become his practices after a while, like sweeping the floor daily. You will be way ahead of business owners who has not cultivated the habit of knowing the actual cash they have on hand.