Setting Daily Cash Collection Goals or Targets

Open any book on business, or surf the net, and you will find information on goal setting and its importance. I am 100% in agreement with the setting of goals, but sometimes find fault with the distant or long-term goals. We set goals for the end of the year, or the month. Effectively, deferring the goal. Long-term goals absolve its creator, of any immediate responsibility. So he/she goes into a “dream-like” state, hoping to accomplish the goal at month-end. When the goal is not attained, frustration sets in, leading to no further goal setting, and leaves the business owner in a rudderless state. Most businesses set sales targets for a year or month.

The sales will be recorded in accounting books, and substantial amount of those sales could be credit sales. So hitting the monthly sales target is excellent, but sales driven by targets would invariably be “credit sales”, and our old problem rears its ugly head again, CASH FLOW! The conventional accounting for sales should be outsourced.

The owner should be more hands-on with “CASH ACCOUNTING”, and set cash collection goals. Try this cash goal setting strategy. Break down that huge goal of $ 50 000 sales for the month, into manageable “bite-sized chunks”, of say $2500 PER DAY! (That is 20 working days; a month has about 22 to 23 working days). It prompts you into action immediately. From the moment you wake up, you have to work towards hitting your $2500 target at end of day. And why not shift the focus away from a sales target of $ 2500.00 to a Cash Target of $2500! Sometimes your cash and sales target would converge (Cash Sales), but as any good accounting student will tell you, it’s not the same thing. Your cash target now becomes that debtor’s age analysis, not clients,(unless they cash clients off course) with outstanding payments, to your business. Plan your day, with only cash in mind, and embark on shrewd methods to extract cash from your debtors. Opt for a cash sale, rather than a credit one. Insist on a deposit, for a major job. If you have a credit card utility machine, go ahead and swipe that card! Your deposits, credit card sales settled by bank that day, cash sales and cash collected, constitute your daily cash takings for the day. Follow through by creating a spreadsheet with the following columnar sections · Checks Collected · Cash Collected · Credit Card payments settled · Direct transfers to the bank Another header in bold on your spreadsheet, should be your daily target. Provide columns for dates, and an important comments section. On the” comments section”, notes are made as to whether the target was attained or not. Be disciplined. You either hit a daily cash target or not. No “ifs” “nearly” or “buts” here. SET YOUR ANNUAL CASH TARGET, and divide your annual target by twelve, and then by 22 to 23 working days, and you arrive at your daily cash target. Working pro-actively on a daily target and attaining it everyday, equates to a monthly and annual target accomplished. If you exceed your daily target by an amount equal to your daily target, you cannot relax the following day, and regard the excess amount as the next day’s target. It is another day, with a new target. Implement this method, and see your cash inflow go through the roof! On a cautionary note, all cash should be banked, and don’t forget to save some of the cash!