Majority Actively Manage Cash Flow

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    While Canada’s economy is steadying, cash flow remains tight for the country’s small business owners and, in turn, the vast majority are taking a more active role in managing this essential aspect of their business, says the quarterly American Express ‘Small Business Monitor.’ It reveals that three-quarters of SBOs (76 per cent) believe effective cash flow management is critical to the success of their business, with most small businesses (72 per cent) reporting that they manage cash flow well. This is an interesting claim, however, considering that the survey also reveals that 50 per cent of small businesses experienced cash flow problems last year. As such, 82 per cent of owners now report that they’ve taken specific steps to gain a greater understanding of their cash flow. A full half (50 per cent) say their management teams evaluate cash flow at least bi-weekly, with 11 per cent evaluating it daily. Another 35 per cent monitor cash flow monthly. Key cash flow areas include long-term planning, market changes, and bookkeeping. But the most difficult part of managing cash flow is accounts receivable, with 49 per cent reporting a struggle in this area. The average number of days it took to collect on outstanding accounts receivable in 2011 was 40.2, a slight improvement over the 40.7-day average reported in 2010.