APPLICABILITY IN THE LOCAL SETTING

The article emphasizes the significant role that cash management plays in businesses
especially in small businesses . Isidro (2015) shared her views on the importance of cash.
She stated that “Cash flow is an essential ingredient to the survival of your small
business. It is the flow of money in and out of your small business, and the quantity as
well as timing of that flow is critical to the continued operation of your business.” The
business will not survive if the finance manager does not know how to handle cash
effectively”.Some small business owners embark on small business initiatives without the cash
management strategies necessary to sustain their businesses. Some small business owners realize
the importance of effective cash management activities to run small businesses successfully;
however, many small business owners lack the know-how and strategy to conduct cash
management activities. Thus, results to problems and risks involving liquidity. Here are
recommended strategies for effective cash management:
1. Increase the Speed of Receivables Collection- A primary goal of a small business
owners’ cash management strategy is to increase the length of time they hold onto cash.
2. Monitor the Payment of Liabilities A small business owner’s effective management of
the accounts payable processes can result in lower costs and improved operational
efficiencies from automated payment.
3. Liquidate old inventory - One of the most significant business expenses you can face is
inventory. To make a profit, you need inventory, but you want to make sure the inventory
you purchase is actually selling.
4. Proper Working Capital Management- The proper management of current assets and
current liabilities helps small business owners ensure that sufficient amounts of cash are
available to sustain business operations , pay obligations on time and maximize the
investment of excess cash.
5. Strong Internal Controls to Safeguard Cash- This is of particular importance because
owners of small businesses are at higher risk of fraud since they have fewer resources
available to deal with prevention and detection.
6. Develop a consistent and predictable cash flow/cash budgeting- Understanding better
the inflows and outflows of cash, a small business leader can attain organizational
stability and sustainability. To truly foster a cash management culture, you need to
actively track your cash flows. Forecasting is a critical step in cash management and
ultimately improving profitability.
7. Utilized computerized accounting systems- businesses who used to manage operations
have fewer problems with liquidity and experience greater success managing cash, as
well as the timing and amount of liabilities, and spend less time tracking finances
required for upcoming liability payments
Businesses in the locality must take note the following strategies mentioned above and the
important issues pinpointed in the article. Businesses should not take for granted the importance
of effective cash management in ensuring maximum liquidity and profitability. Cash
management therefore, is a challenging and difficult task, due to the fact that the life of
the business hangs in the balance, which is why business owners need to manage their
cash efficiently;