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Cash is King

Running a business takes cash. With it, you're free to do as you please without it, you end up trying to please others. Essentially cash is like a king or queen it royally rules all of its constituents and governs all of their possibilities. The school system doesn't teach us about creating and managing cash. The culture teaches us about consuming and spending cash, but it sure doesn't help us keep our cash. There is one fundamental thing we all need to know about cash: if you appreciate it, it appreciates. Here's how you can show your cash some appreciation:

1. Watch it
On a daily basis keep track of your bank balance, payroll expenses, accounts receivable and accounts payable on a whiteboard beside your desk.


2. Protect it
Tell all of our customers that you run a cash-only business and if they want short term credit they will have to pay you a three percent premium. Write up your invoices on the first day you start work or ship the product to a customer. Now you're ready to deliver those invoices instantly when the job is done. If you do allow some credit purchases call to collect the cash five days before the negotiated due date. Always insist on weekly progress billings.


3. Care for it
Negotiate with your suppliers a minimum of sixty days payment to pay for their goods/services, but only permit your credit customers to pay you within thirty days for your goods/services. Whenever you have a surplus of cash pay your suppliers early and take their prompt payment discount.

 

 
 
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