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Cash management strategies for contractors can pay off. (Taxing Matters).

Publication: Mississippi Business Journal
Publication Date: 28-APR-03 		Format: Online
Delivery: Immediate Online Access
Full Article Title: Cash management strategies for contractors can pay off. (Taxing Matters).(Column)

Article Excerpt
Raise your hand if you like cash. Me, too. Who doesn't?

Contractors can maximize cash flow through good cash management strategies. Cash management is part of a company's total effort to increase profitability.

Cash management can be defined as the process of documenting, organizing, planning and controlling the creation, collection, investment and disbursement of cash.

Cash flow management begins with the decision to bid a job. Due diligence regarding whether to bid a job includes many factors, including risk analysis, scheduling issues, competency issues, etc.

Pro-bid cash flow considerations

One of the most important cash flow considerations is the credit worthiness of the owner. Helpful inquiries include:

* Credit Reports -- Dunn & Bradstreet or other credit report sources

* Internal Financial Statements -- Review the owner's latest financial statements

* Bank References -- Contact bank references and consider confirming significant loan balances

* Litigation Review -- Owners prone to lawsuits may not be worth working for. Review the owner's current and historical litigation

* References -- Inquire of suppliers and other contractors about the owner's payment history...

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