Finance

Operating capital of a business is the most important of its entire components and hence a managers possession of the required knowledge on how to manage this capital is equally important for the general success of that business.

According to Lesonsky (1998), business working capital refers to the difference between its current assets and current liabilities. In a simple business language, it is the amount of cash needed to run the activities of the business effectively. As the most important business asset, cash will provide the management of Watree Lodge with liquidity and buying power. To achieve this, the management of Watree Lodge should be able to control the cash flow. This can be done through preparation of cash budgets that will enable them to manage cash inflows and outflows. When prepared well and in time, the cash budget will help the management know whether the business has enough cash to meet its financial obligations. i.e. the objective of cash forecast is to alert the management about possible shortfall in cash or surpluses. This will in turn help the management make informed decisions on whether to invest or to borrow in advance.  In order to realize this, the management should consult with all stakeholders including business managers as well as possible suppliers.  

Greenville Restaurant operates two bank accounts where one earns an interest while the other does not earn interest. Evidently, the management is losing a lot of revenue due to their poor banking options, for example, it takes too long for payments to be processed from clients since half of all orders are paid via mail. The management of Greenville Restaurant should therefore employ the special services offered by various banks to help it manage the business cash more effectively. The best service in point here is lockbox bank processing that allows a client with a huge number of receivable accounts to collect and process payments quickly i.e. this service will enable the bank to directly receive mail payments payable to Greenville Restaurant, a process which saves on time while enhancing efficiency.  

     As Greenville opens new restaurants it can reduce its administrative costs by employing account reconciliation bank service that allows the bank to create summary account reports that are then sent via internet to the business for easy cash analysis. This service will also help the business to guard itself against bank related fraud. The business will also benefit from bank sweep account services that will allow Greenville chain of restaurants to save and at the same time invest in overnight investments done by the bank on behalf of Greenville. Finally, because Greenville will own numerous bank accounts, it can also benefit from zero balance account service that allows the businesss numerous accounts to be consolidated so that individual accounts need not maintain minimum operating balances while at the same time exempting the account holders from paying certain charges.

In order to be able to manage their credit card payments effectively, the Greenlees should ensure that their progressive point-of-sale is PCIDSS compliant. As if that is not enough, the Greenlees need to make sure that their internet service is secure so that customers electronic data is kept confidential. Greenlees should use VISA and MasterCard since they normally charge the credit card fees at a lower rate. However, efforts should be put to increase credit card sales as this will considerably lower the rate of charges since the more the sale volume, the lower the transaction charges.