Article Link: http://exchangepress.com/article/fourteen-steps-to-more-effective-cash-flow-management/5015915/
As anyone who has been in the early childhood business for more than a few days knows, managing cash flow is an incredibly important skill for a center director. Even a center with an annual budget showing a healthy surplus may experience brief periods where funds in the checkbook are insufficient to pay all the bills.To discover how successful directors manage cash flow in tight times, we surveyed members of the Exchange Panel of 300. Summarized below are their tips for planning ahead, suggestions on what to do in the midst of a cash flow crisis, and tempting solutions to avoid.
Prepare today
The most important steps you can take to deal with a cash flow crisis are those you take before the crisis occurs:
• Always budget conservatively. A common mistake of rookie directors is to develop an annual budget based on full enrollment. Even the very best centers find it impossible to maintain enrollment at 100% as there are inevitable lags between one family leaving and another enrolling. More often centers operate at between 80% and 85% capacity. To avoid creating unnecessary cash flow surprises, make sure that you budget income with considerable conservatism and expenses with considerable pessimism. Any ...