Cash management can be a difficult juggling act. When you’re focused on your business and increasing sales and profit, it can be hard to plan for unforeseen circumstances. It is important to remember, however, to keep your businesses bank account ready in case an unforeseen circumstance does arise. Some circumstances that could throw your business through financial troubles are: slow months, equipment breaking down, family issues, computer problems or even theft. If any of these circumstances occur, you should have some level of “safety” cash, above the normal level of cash for operations, This cash is known as “working capital,” and it is used to fuel your business’s day-to-day operations. The more cash on hand or access to cash, the more prepared you will be to take on unforeseen expenditures.
How Much Do I need?
For new companies, it can be difficult to estimate how much cash you should set aside for the daily operating expenses. It is recommended giving yourself a few months to track your income and spending habits. If you have a business credit card, you can look at your credit card statement during these few months to track your spending and put together a monthly forecast for expenses.
How Much Cash Should I Have?
One major thing to point out is that it is not a bad thing to spend left over cash on your company. Reinvesting in your company and putting more money in to buying new equipment or other items is how you can help your company grow. It’s smarter to save just the right amount of cash for emergencies and use the rest to reinvest, rather than only saving money and not upgrading/expanding.
What If I Don’t Have Enough Money This Month
Even though it is smart to save enough cash to cover emergencies and daily operations, it is understood that not all businesses can. That is why at GSG Capital, we can refer you to a Working Capital program. If you need some cash to help cover your monthly cost obligations, and emergency expenditures have bled through your funds, this program may help. This may help companies that may have run into financial hardships get back on their feet and give them the money to succeed. Contact us today at firstname.lastname@example.org.