Do You Know What Your Book Balance Is
Mar 10, 2009
Do you know your personal cash balance? Hey business owners, do you know your company’s book balance? Given today’s on-line mentality, many business owners feel that all they have to do is log onto their banks web site and print out their daily cash sheet. Boy, are these owners heading down a path to failure.
I recently asked a prospective client if he knew what his book balance was. He drank the cool aid and replied; I log into my banks web site and look up the cash balance. Upon informing him that he was not viewing his “book” balance but was in fact viewing his “bank” balance, he gazed with that question in his eyes.
When I then asked if he knew whether he had sufficient funds to write and mail the next check (payment) to a vendor, he did not know. Finally, I provided some basic cash management education. I informed him that his bank balance was not adequate to operate his business because checks released but not yet presented (paid) to his bank, are not deducted from the amount viewed (cash balance) on the web site. If his business maintains its books and records on a current, accurate basis, he will always know with complete certainty, whether he can release the next check.
There is a motto that I learned early in my public accounting career during a seminar on cash; “Cash is King!” In today’s business world, where the next sales order is questionable and customers are having increasing difficulties remitting their vendors invoices timely, Cash is King. It is imperative that business owners know daily what their business can and cannot afford. Finally, it is strategic that the Owner knows weekly, monthly and quarterly what their cash balance is and will be given the current level of sales and operating expenses.
Only a professional who has spent the majority of his business career advising business owners can provide the benefit that organizations need in today’s economic climate. A partner of B2B CFO® has this expertise that business owner must have!
Find that individual by opening your internet browser and entering “www.b2bcfo.com”
