Just like big companies or organizations, individual management of debt and payables is a hard thing to monitor if people are not careful. Ideally, the notion of expecting dues and receivables without even actually realizing them first is one culprit that adds up to insurmountable debts due to delays in payment schedules at one point or another. While such practices cannot be avoided, especially for individuals who go into personal and private business, the need to have revolving funds at which they can operate is usually the conflict that would arise.
To make a business a well-oiled machine, people need to take risks in providing credit to loyal and deserving clients. For bulk orders, immediate payment is rare, and would usually be made using post-dated checks for them to be able to finance the entire deal that is to be consummated. Holding out at times, due to undecided states, which may eventually be high-risk and potential bad debt accounts will be the ante for it all. Most business survive due to proper debt management and this is a reality. Rarely do we see successful companies exist for a longer period of time without the proper debt management personnel to regulate the cash flow of most companies. This is perhaps one of the most forgotten aspects of a business, the need for a good finance person or head to be able to analyze and revolve the funds and present it to top management so that they may be aware of their current situation and stance.
If people think that business planning is tough, they should check out how to go about financial planning. Financial planning entails playing with numbers, proper auditing of cash movement and forecasting with consideration to the internal and external factors. Financial planning plays a part in business planning as well. The proposals, recommendations and such cannot be accomplished without proper funding as well.
Going back to personal finances, this is not really farfetched from a corporate setting, understanding and knowing up to what extent their funds can suffice. There will be people who would be daring at times, looking ahead and not being aware of their current financial status while wanting to make high-risk business decisions. In most cases, the solicitation of varying opinions from other people who are professionals in their fields may be a good way to go, especially for delicate matters that require critical business decision making.
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Originally posted on August 27, 2006 @ 9:05 pm