31/08/2015
In a lecture in the industrial development center in Jubail
An expert assures the small establishment’s need for managing cash flow
Asharqia chamber of commerce represented by the industrial development center in Jubail had a lecture about how essential is cash flow management in small and medium sized establishments, and emphasized that it is crucial to the success of any project. Salem Al-Khaldi, the president of International System Est, has presented this lecture, which was held in jubail technical institute, Monday 24 of August 2015. The lecture was titled “financial management for small businesses”. Al-Khaldi has asserted that businesses owners should put some monetary limitation. Those limitations along with cash flow management would assure the businesses’ ability to pay off their debts. It will help answering crucial questions such as is this business making any profit or is failing.
He also assured the importance of recording daily transactions, which includes cash sales, charge accounts, cash expenses and the general expenses record. All this is important for the business owner to manage his business. Cost calculation and pricing products and services should be utilized, because that would essentially help in monitoring the cost and planning. When pricing products or services, production costs as well as competitors prices should be put into consideration, as well as the price customers are willing to pay.
Al-Khaldi said that being financed is one of the biggest challenges any small businesses can face. Small businesses usually require long-term financing, which is an options banks try to avoid, because of the high risk in it since such businesses are often fail, thus, loans will not be paid. The lack of experience is also an issue; it becomes evident when small businesses fail to contribute to the national economy, and usually results in adding costs to the production process. That along with the low technological standard in those small establishments usually hinders their ability to compete in the local market.
The lecturer discussed monetary management and described it as the defense wall that companies lean on to fulfill all their monetary obligations. Capital and stocks are the most available liable short-term assets, and capital is used for selling and buying. The monetary assets of a company consist of the capital in the company’s fund, and all the money on demand in the enterprise’s accounts. Having capital is essential for the enterprise to be functional and prosperous, as well as punctual in fulfilling all monetary obligations.
Al-Khaldi has explained the need for keeping capital as funds. Besides funding the daily dealing of buying, selling, paying salaries and wages, the businesses need cash flow for emergencies or even for opportunities like taking over other companies by buying stocks in them. In addition, having funds is essential to benefit of the reductions on the raw materials prices when exporters announce that, as well as the expected reductions in the interest fees, to expand investments in stocks.
