Cash Flow is the lifeblood of every business. You can have all the ‘Profit’ in the world but if you don’t have any Cash Flow it can be as inhibitive to your business as having no profit. Lack of Cash Flow can prevent you from purchasing items for sale at discounts, prevent you from purchasing needed Plant, Delivery or Office Equipment that is necessary for running your business. It can also prohibit you from seeking opportunities to grow your business. Throughout your software are tools to assist you with keeping up with your Cash Flow.
Accounts Receivable has a Cash Flow Report under Open Invoices that reports the amount of in-coming cash you can expect from your Customers for the current period and the next four future periods. This information can assist you in anticipating your current and future inflows of cash.
Accounts Payable also has a Cash Flow Report under Management Reports that reports the amount of all out-going payments that need to be made for the current and four future periods of your choosing. This information can assist you in anticipating your current and future outflows of cash.
Inventory reports can also assist with Cash Flow. The Slow/Fast Moving Report can assist with Purchasing decisions as well as decisions to perhaps put slow moving items on sale for quicker movement. The Sales Analysis Report shows Period to Date and Year to Date history of items. You can use this report to analyze the turnaround time for items. The Trend Analysis Report can be used to analyze trends in the sales of your items.
General Ledger contains a Cash Flow Statement that can be set up that provides information regarding the sources and uses of your cash and cash equivalents for a specified period of time. This will show you at a glance how your money is coming in and how it is going out.
Balance Sheet can provide you with Liquidity Analysis Ratios, such as:
♦ Current Ratio (Current Assets Divided by Current Liabilities)
♦ Quick Ratio (Current Assets less Inventory, divided by Current Liabilities)
♦ Net Working Capital Ratio (Current Assets minus Current Liabilities, divided by Total Assets)
Bank Reconciliation, Banking, and Direct Deposit assist you in keeping up with your cash.
Beware of a higher than expected utilization percentage as well. It too can be an indicator of issues as a result of staffing issues, such as needing more staff or a change in the assignment of duties for current staff.
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