Preserve your investors' funds for costs di- rectly related to business operations, not overhead, if at all possible. As your sales increase, you can purchase the overhead-related items from the cash flow-but only if you have set and achieved new higher sales goals. General Cash Management: • Have an investment plan for your cash on hand to max- imize its earning potential. • Establish a line of credit with your bank before you need it. • To make sure you can move quickly to borrow if needed, keep an eye on your current ratio (assets over liabilities-at least 2:1 is good) and quick ratios (liquid 340 Rich Dad's Guide to Investing assets divided by current liabilities-should be over 1:1). • Establish good internal controls over the handling of cash. - The people who record the cash receipts on the bank deposits are different from those who post it to the ac- counts receivable and general ledger. - Checks should be endorsed immediately "For Deposit Only." - The people authorized to sign checks should not pre- pare the vouchers or record the disbursements and post to the accounts payable and general ledger. - The person who reconciles the bank statement should have no regularly assigned functions related to cash receipts or cash disbursements. (Our outside account- ant does this.) While this may sound very complicated, each step of cash management is important. Call on your accountant, banker, and personal financial advisor for advice in struc- turing your cash management system. Once you establish a system for how to manage your cash, ongoing supervi- sion is still essential. Review your cash position and fund- ing needs daily, and prepare early for additional funding that may be required for your expanding business. Many people lose sight of cash management when their busi- nesses become successful. This is a major cause of busi- ness failures. Proper cash management (and therefore expense management) is crucial to the on-going success of any business. For those of you considering purchasing a franchise or joining a network marketing organization, you may find Cash Flow Management 341 much of the cash management system will be provided for you. With a franchise, you will still need to implement the system and oversee it. Network marketing organizations often handle the cash management on your behalf. In these cases, the corporate headquarters performs the ac- counting functions for your organization and sends you a report of your earnings periodically with payment. In ei- ther case, it is still important to have your own advisors to help you structure your personal cash management. 344 Rich Dad's Guide to Investing 1. Sales 2. Marketing systems 3. Advertising, headlines, and copy writing 4. Negotiations 5. Public speaking 6. Direct-mail advertising 7. Running a seminar 8. Raising capital Of all of these topics, raising capital interests budding en- trepreneurs the most.