Cash is King!

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As Dave Ramsey likes to say, “…cash is king…”. I have to agree. Having a cash reserve (1) provides freedom for both you and your business. Freedom from concern about meeting not only the next payroll, but the payroll you need to make three months down the road. Freedom from stifling creativity and resourcefulness. Freedom from being in bondage to your suppliers and vendors. With an adequate cash reserve, you have a stronger negotiation position. With an adequate cash reserve, you put your business in a greater position to improve your margins and reduce expenses by taking advantage of early payment discounts. An adequate cash reserve also allows you to pursue changes in your business plan necessitated by the marketplace or as called by God.

How much cash should you have in reserve? A good rule of thumb is to retain approximately 50% of your annual expenses for a cash reserve. You can get there by committing to saving a percentage of your profits each month.

If you would like to learn more about increasing your cash flow by improving your invoicing and collections or how a part-time, virtual CFO can help transform your business using the Bible as our guide for a fraction of the cost of a full-time employee, email me at commonsensecfo@yahoo.com or call Kirk at 402-658-7340.

(1) And let them gather all the food of those good years that are coming, and store up grain under the authority of Pharaoh, and let them keep food in the cities. Then that food shall be as a reserve for the land for the seven years of famine which shall be in the land of Egypt, that the land may not perish during the famine.” Genesis 41:35-36 (NKJV)

2 Comments (+add yours?)

  1. Tatiana Flaker
    Mar 11, 2011 @ 05:42:56

    Major thanks for the article post. Will read on…

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