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Cash Flow Managment Strategies

Autor:   •  September 6, 2015  •  Term Paper  •  743 Words (3 Pages)  •  1,073 Views

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Cash Flow Management Strategies

Managing cash flow for any business is crucial to the survival of the business and that will be the same for Groom and Go. Groom and Go will focus on the big three of cash management, which are accounts receivables, accounts payable, and equipment and inventory (Zimmerer, Scarborough, & Wilson, 2008).  Groom and Go will focus first on inventory needs to run a successful business. The major equipment/inventory will already be in place at the start of the business. This will consist of a cargo van, grooming table, water supply and pump, generator and storage for supplies such as shampoos, conditioners, eye drops, styptic powder and other consumable products. To control the cost of the major items needed for the business it will be necessary to only purchase the items needed to get the business going and invest later in more items as the business grows. Next Groom and go will focus on the inventory that is used for each each grooming session. These items will consist of basic items such as shampoos, conditioners, eye drops, styptic powder and other consumable products. These items will play a vital role in the cash management strategies of the business because it will be vital to the business to recoup these costs in the price of each grooming. It will also play a major role in ensuring that accounts payables are paid in a timely manner.

Accounts Payables is a part of any business and the best strategy here is to get and maintain favorable terms with the suppliers. “Entrepreneurs should strive to stretch out payables as long as possible without damaging their companies’ credit rating” (Zimmerer, Scarborough, & Wilson, 2008, p. 448). Other considerations to handle accounts payables are to take advantage of any discounts offered by the supplier, which can save the company money in the future. It is also important to make sure that all the payables for the business do not come due at the same time, which will put undue stress on the company’s cash flow (Zimmerer, Scarborough, & Wilson, 2008). Another way to handle payables is to workout extended terms for payables with companies that do not offer a discount for early payment.

Accounts receivables are the most important consideration in the cash flow management because without receivables the business will not be able to remain open. Because of the nature of our business, we will handle receivables at Groom and Go with different methods. For a basic grooming, prices will vary by animal size with a $50 minimum. There will be no deposit required and payment is handled at the time completion of services. Multiple service appointments greater than of $100 will require a deposit, which will be based on the final cost of the grooming. For instance if the grooming has a final price of $100 the deposit would be 15%; however with orders of $150 or more the deposit will range from 25% to 50% of the final cost. These deposits will be in place to cover the cost involved in grooming. It will also ensure that the customer keep made appointments, as it will hold their slot on the schedule.

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