Part 2 of a 3 part series
- Significant decrease in working capital.
- Significant decrease in current ratio.
- Significant decrease in quick ratio.
- Sudden unexpected decrease in cash.
- Cash below projected levels.
- Delay in paying bills.
- Lost cash discounts.
- Excessive bank charges.
Steps to Improve: SPEEDING CASH FLOW / CUTTING COSTS
- Deposits should be made daily to boost cash flow.
- Deposit earlier in the day to boost cash flow.
- Cash in on interest bearing “sweep” checking accounts.
- Work with the bank to establish working balances that minimize bank charges.
- Keep bank charges reasonable.
- Use a monthly cash flow analysis to forecast financing needs.
- Use bank “lock box” to maximize interest on deposits.
- Use bank “lock box” system to speed cash flows.
- Use wire transfers to speed transfers between banks.
- Use one bank with wire transfers between branches.
- Use spare cash to pay down lines of credit.
- Invest idle cash.