Up Your Cash Flow / Goldstein 75-76

76 Cash Collections.

Generally, there are four alternative methods that can be used to determine how cash is going to be collected. Use the alternative you feel most comfortable with.

Alternative 1. If you are in the 100 percent cash-and-carry business all sales are collected in the month the sales are made.

Alternative 2. Be arbitrary.Guess what you believe the collections will be during each month of the year.

Alternative 3. Go back to prior years to see what each month's relationship of collections is to the year's total. Apply that percentage to the total annual collection you expect to receive.

Alternative 3. Assume that a month's sales will be converted to cash consistently in the months following the month of the sale. (45% in the month of the sale, 40% in the first month following the sale, and 15 percent in the second month following the sale)