L
MONEY WATCH
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By THEODORE R. DANIELS
:M.
&
Cash management &
borrowing in business
Poor cash management is the raason why soma owner-man
agers of small firma have trouble when they try to borrow money.
Those managers fail to forecast and to plan for cas^ needs. Tha
resulting business ailment is a "cash crisis." This happens even
& whaiiaalas-yolumaa ara goodr? 7r
; : Sound cash management must be practiced if loans are to ba
obtained and used profitably. Such management includes knowing
the firm's cash flow, forecasting cash needa, planning to borrow at
the appropriate time, and substantiating the firm's payback ability.
Sound cash management Consists of arranging matters so
that current liabilities are provided for as they become due and
hence paid promptly. Whan such coordination is not present, the
result is a constant "cash crisis,"
? TO &W A crrsTs" you shouIcTdetermine now mucn cash
; your firm needs for its normal operations. Then plan your financea :
to achieve the;goal. The amount of dash which a business will
need differs because all businesses are not alike. Usually, for com
fort, five to ten percent of a firm's working capital should be in
cash. r
In a sense, financial planning is what you anticipate your
financial statements will show on a specific date and how you
; Intartd to,g*t thera. A cash forecast wilt Indicate whether or not i
ttili plan ot operation If feiaibia, A budgat will indicate tha avalK
? ability of cash at all points of operations*" ^ ? | | ||
SSSpih Budgeting *\ - " Jpl i 1 ' " -
When the subject of budgeting comes up, some owner-man
ager* say, "Thara tor the big fellow, I know what my volume Is and
v my bank account tells me how much money I have.* These owners
fail to realize that budgeting can help to eliminate errors of judg
119 madrlh halt* or made on asaurriptloria rather lhah
ft vV" The firsi thing you must know In budging is what you* antt#* |
2 pated expenses are going t?- be for the period being budgeted^
- rThen, hoWmuchJn: salea^pustbe generated Jo pa?|?pe|M
j V asfAi^ fttiallv what will be ieft,lVou must fry to determine the MfifrF
i and. low points in your operations in order to provide the adequate
amOuht of cash. A sales analysis of previous periods will indicate
wheh the hlgh and low point# ooour. Hf K 1 1 if 1 1 1 ? " i |p|
1 ? TW* forecasting hetpa you to jplan for financing the purchase
Of inventory and for partying your accounte receivable. Controlling
inventory and accounts receivable can help to take the strain off of
your working capital.
83?
The cash budget is the most effective tool available for plan
ning the cash requirements and
pKp plan your financial operation ? the cash you expect to take In
and pay out. Your goal In budgetlng^^Maintain a satisfactory
^S,bue?sK2^^?Brf ,n proi#cl ^ CMh
* Provide efficient use> dlsbursements^te
luring' requirements*nfay be^slablfehed1 a'nd actual amounts
? De, arm, ne periods for repayment of borrowings. |M
Ml * Establish the practicability of taking trade discounts or not
MltipMlViHWls |M 1 ' f-! MM!
| \f ? C&tarmlha periods of llliiiaMor investment or gtfi
- chase "of Inventory and equipment. p| | ?p 1 - 1 || |p? 11 " \ l|
| HP Indicate tha adaquai<t:or naatt for additional parmanarit
wo?*ingcapitaj in the business. ?| mm *-s I; 1 1 II 1 i?l I 1
. Tha Important thing to keep in mlnd lft making ft cash budget
la IfWMivOrd 'Jcajh* Be ?
.mate sales cCUrtderestimat? expenaie. Your sales forecast m?st
I be as accurate as possible because* it I* the basis for figuring your I
? cash and axparwaa. > | mm -
; Use your experience to determine your cash sales. In season- <?
al businesses and those which have higMScket merchandise, the -
percent of sales that are for cash win vary from month to month.
Account tor these ups and downs in each month if they apply to
.vOtir business. s - " ill
United Nat'l
Bank bucks
recession
High. Point, N.C. ? United
National Bank will launch the con
struction of its High Point head
quarters with a groundbreaking
ceremony at 10 a.m. on August
29. The ability of the bank to make
such progress in a difficult econo
my has been hailed by the city's
chief business recruiter.
"We applaud United National
for prospering to the point of build
ing a permanent facility here dur
recession that has proven
especially challenging for financial
institutions nationwide," says Dan
Lynch, president of the High Point
^Economic Development Corp.
? "We are also pleased to have a
new bank that is community ori
ented, with an eye on promoting
the development of small busi
ness." 7 ?
Landmark Builders of Greens
boro expects to complete con
struction of the 3,000-square-foot
building at 200 Greensboro Road
in 90 to 120 days.
The new facility, which will be
United National's first permanent
home in High Point, was designed
with the customer in mind, says
Solomon Redman II, bank vice
president and city executive.
The new building was
designed in response to an exten
sive marketing study that deter
mined what local consumers want
in a bank. For example, it will
open Saturdays from 9 a.m. till
noon; and it will offer two drive
thru lanes for tetter service^ and j
-another drive-thru with an auto
matic teller machine.
The location also stems from
the marketing study. The bank is
being built on a major thorough
fare connecting High Point,
Jamestown, and Greensboro, and
in a strong neighborhood with a
good mix of commercial and resi
dential development, Redman
says. The building'6 colonial
facade was designed to blend with
the Five Points area, which
includes the Presbyterian Home
and Evergreens retirement com
munities.
United National Bank was
founded in Fayetteville in 1.976
and In 1990 posted assets of
$23.2 million. It opened in a tem
porary facility in High Point, March
1, 1990, and is the city's only
minority-owned bank. It caters to
individuals and owners of small
businesses, says Leonard N.
Hedgepeth, president and chief
executive officer.
The High Point bank has
grown steadily to reach more than
$4 million in deposits, he says.
"We are confident that with the
expanded services available at
this new facility, United National
will become a major player in the
city's economic future."
Bank officials will be joined by
business and government leaders
at the groundbreaking ceremony.
used
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and up and up
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Visit One of These Convenient Crown Drug Locations
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Winston-Salem, NC Lexington, NC
766-9322 249-6732
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634-6216