Rick Kadet on Good Cash Management Practices

At last week’s breakfast in Sunnyvale Rick Kadet offered a list of good cash management practices:

• Really know your current cash balance. Reconcile your accounts and always consider outstanding payments.
• Centralize and pre-approve any spending. Keep records of authorized spending:  purchase orders, travel, offer letters, expense re-imbursement, outside consultants.
• This also minimizes mis-understandings with your co-founders
• Have clear “not to exceed” limits on outside projects: break them into phases with clear deliverables, tie payments to results.
• Once a month close the books and do an income statement and balance sheet.
• Pay close attention to sales compensation and commission plans to ensure you are incentivizing the right behaviors.
• The founders’ actions set the tone with employees and vendors:  stress frugality but don’t micro-manage or unintentionally communicate a lack of trust.