Good fiscal management requires owner/managers to constantly perform a balancing act to control costs and avoid unnecessary expense and penalties while maximizing the business' cash flow.

Here are ten strategies that can help you juggle your cash flow more effectively and improve your bottom line.

1. Ensure that all staff remit payroll information on time to permit correct and timely preparation of payments. Each employee's payroll file should be periodically updated to reflect changes in matters such as the hourly rate or salary, vacation pay rate and deductions for dependants, pension plan, medical coverage and the like. Remit payroll withholdings and deductions on time to avoid penalties and interest.

2. Make sure everyone understands the rules of the provincial workers'compensation board for employees and contract workers. Distribute and post the guidelines that employees are to follow in the event of accident or injury. Remit premiums on time to avoid penalties and interest costs.

3. Pay corporate and personal tax instalments on time to avoid cash flow surprises at the end of a fiscal period. Monitor GST inputs.

4. Monitor the company's bank accounts carefully to reduce the risk of insufficient funds, the resultant NSF charges, and the time that would be required to satisfy the bank and appease employees or creditors if a cheque is NSF. Establish a line of credit to provide overdraft protection for late deposits, errors and lagging accounts receivable.

5. Ensure lease payments are made on time to avoid late charges or penalties. For new acquisitions, carefully analyze the costs of purchasing with borrowed funds versus the costs of leasing, including tax planning considerations. Review the excess mileage costs and buyout clauses in vehicle leases so you are not surprised with a large balance owing at the end of the lease's term.

6. Establish a cash flow management reporting system to ensure that you are regularly updated on what cash is on hand, what cash is expected to arrive and what cash outflows must be sent to creditors on a weekly basis. Having an on-going knowledge of cash flow requirements will help you control interest costs on your operating line of credit.

7. Invest excess corporate or business funds in short-term, interest-bearing instruments. Use the instrument as security for business loans to negotiate lower interest rates. Ask your financial officer to notify you whenever excess funds are available to encourage better use of capital.

8. Establish guidelines for reimbursing employees for business expenses for kilometres travelled as well as out of town accommodation, meals and other expenses for promotion and entertainment. Make it company policy that receipts are to be submitted with expense reports. Monitor all expense reports and question exceptions to the guidelines.

9. Scale back employees' expectations for company vehicles by setting cost-effective parameters for model and options. These should apply to company owned or leased vehicles as well as rentals when employees are on the road. Before purchasing or leasing a company vehicle, research repairs and maintenance costs and insurance premiums on the particular model. As discounts are often available for repeat business, negotiate fleet discounts from the local mechanic, insurer and gas bar.

10. Plan out of town trips to take best advantage of lower airfares, hotel rates and other discounts. Whenever possible, combine client meetings with conferences, courses, or other business-related functions at the same destination. When an employee plans a business trip, are the travel costs justified in view of the anticipated increased business from existing or new customers?

When times are good, take time to improve your cash flow management. If the business faces a cash crunch in the future, your strategies for controlling costs will help you survive a downturn.

We would be happy to assist you in implementing the above strategies. Should you so desire, please contact Logan Katz LLP Chartered Accountants to set up a time to meet.

The above provides general information only. It should not be regarded or relied upon as accounting or taxation advice or opinions. Logan Katz LLP Chartered Accountants would be pleased to provide more information or specific advice on matters of interest to you.

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