Cash is the lifeblood of any business, especially a small business. A small business is “small” with limited capitalization and fewer options to raise cash to finance operations. It thus follows that cash management to record and control cash coming in and out of the business is of paramount importance. Everything about the small business must be structured to maximize cash operations, including retaining cash if possible, while ensuring that cash due to the business is collected as soon as possible.
The first consideration given to cash management is how the business is financed. If a small business is financed the wrong way, it will bleed cash. Too often, the only finance available to small businesses is bank loans, which is unfortunate. A bank loan taken too early by a small business will burden the business with interest costs, which will slow down growth.
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