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Analyzing Cash Flow and Preparing a Budget A management should prepare cash flow data on a monthly basis for the current year. In larger communities, the management should compile cash flow information more frequently, on a daily, weekly, or biweekly basis, depending on the size of the community. The management should prepare cash flow summaries using two basic categories of inflows and outflows of cash, recurring and extraordinary. Recurring payments and receipts, such as payroll expenses and property taxes payments, can be anticipated regularly, month after month; extraordinary payments and receipts, on the other hand, result from nonrecurring programs or items, such as federal grants or capital expenditures. The management should use the history of major collections and disbursements for the previous 3 to 5 years to identify recurring expense and disbursement patterns. The management should then extrapolate these past trends into the future, being careful, at the same time, to make adjustments for anticipated changes in timing and payment patterns and to recognize when particular historical data is not representative. Suggestions for Improving Cash Flow The management can maximize the amount of a available cash by accelerating cash receipts. A management can increase the available cash amount by: · Making daily deposits. · Using a lock box. · Applying promptly for reimbursement of amount. · Utilizing, direct deposits, Automated Clearing House payments, and other electronic means of transferring funds, whenever possible, making sure that the appropriate safeguards are in effect. · Effectively Investing Available Cash the management invest all monies not required for current operations so as to receive the highest rate of return reasonably available taking into account safety, liquidity and yield. To maximize interest income, the management must determine how much money is available to invest by answering the following questions: · How much cash is on hand? · How much money is needed to meet weekly or monthly warrants? · How much money will be deposited weekly or monthly? The management should use the answers to these questions as a basis for planning investments. By maintaining a chart of deposit accounts, adding the daily deposits to these accounts, and subtracting amounts transferred or paid on warrants, the management can determine exactly how much cash is available to invest. Furthermore, the cash flow budget will permit the management to determine the length of time for which particular funds can remain in investments. Funny Picture, Video, wallpaper, games Free Study Material For Student Free Tips How To Earn Money Online Without Any Investment
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