Cash Management Questions That Will Help You Save Time and Boost Profits

November 2003
by Thomas J. Vilord

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As the owner of a small business, you probably know that effective cash management is critical. Ask yourself the following questions. Each time you answer “yes,” you’ve found an area where you’re spending too much time and money.*

Do you call or visit your bank to transfer funds back and forth between your money market and business checking accounts? You can eliminate this task by opening a single cash-management account that combines checking, brokerage, and lending services. At the end of each business day, the available cash in your company’s checking account will automatically be “swept” into your money market funds. In addition to saving time and effort, you will be investing your working capital more quickly–and that can help increase your returns. What’s more, you’ll avoid the overdraft charges that result when manual transfers are either miscalculated or delayed.

Do you call or visit your bank to access your commercial line of credit or to make loan payments? If you qualify for an integrated line of credit, this task too can be eliminated. In general, your line of credit will automatically be accessed whenever the cash in your money market account is depleted. This helps avoid overdraft charges and, because any excess cash in your account will automatically be used to reduce your credit balance, helps minimize your interest expenses.

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