Few Tips on Maintaining Cash for your business..

In my previous article, I have tried to depict a detailed discussion up on needs of cash management. We have seen tactful management of cash can have a substantial impact upon profitability of an entity. However, the question of effective cash management rests in efficient maintenance of cash at an sustainable level. Further its also facilitates in better working capital management & accordingly improves the current ratio to define the financial stability of the business.

In recent times, major economic instability across the countries & as the recessionary roll outs ruthlessly in almost every industries, most of the small as well as middle scale business units are finding hard to cope up the financial curse & hence many of them are already winded up & rests are running short of fund. Henceforth, it is crucial concern for every business organization to work out a initial feasibility over the average maintainable level of cash requirements. However, these words doesn't have much value for an entity already in disaster. Henceforth, it will be better of to discuss upon few revival remedies for a staggering concern to get rid of financial rigidity.

For every business entity, the relative strength of available cash & cash equivalents reflects in current ratio. Accordingly, to maintain a healthy current ratio, sufficient amount of liquidity must be put in to business. However, if the available cash & cash equivalents are lagging behind the least requirements, then need to work out upon alternative options. Firstly, as all of us commonly do in time of crisis, evaluate the extent of scraps in process & non performing fixed assets & sale of accordingly to feed your financial needs. Also one need to console his operating activity as per the current economic circumstances where the demand in in downturn day by day. It will further help to bring down the working capital needs. However, it is not always easy to change the level of operational activities due to prospective impact upon cost effectiveness more precisely for big production houses. Secondly, if the above options are not sufficient enough to satisfy the severity, further steps can be taken in negotiation with creditors & debtors. Ask for longer credit period from the creditors as far as possible so also to debtors by keeping a constant track with them & make them to pay at their earliest. Also, if there is any negotiable instruments in hand, these can be easily discounted through any banks. Apart from these, non performing assets like doubtful debtors etc can be discharged off at a discounted value through some agencies & institutions deals in such. Thirdly, taking a term loan is a good option provided the business has the capability to cope up with that. For a public company, further fund can be raised through IPO's & right issues etc. Although, in recent terms I don't think there will be enough response in such practices. Fourthly, federal government of most of the countries in economic dire, offers several revival packages & grants to safeguard the business functions of every scale. As such, before taking off the entire activities, it will be apprehensive for every busines concen to evaluate these options wisely.