Whether your business is developing or going through tough times, managing your business cash flow efficiently is vital and, for many, the key to business subsistence. You’ve perhaps heard the figure that over 40 percent of businesses that go broke are profitable but just run out of cash.
From a cash perspective, a business is like a sponge — it sucks in snowballing amounts of cash and, to get money out of it, you have to give it a good squash. If you cannot manage the business, the sponge will grow bigger with each squeeze, making it challenging for you to keep it in your hand. Successfully managing your cash flow will ensure that your business stays right on track to achieve its objectives. Here are some ways to do that.
Preparing and maintaining a cash flow forecast is a great way to understand the flow of money in your business. The forecast should be regularly updated to get an accurate picture of how the business is performing. Set specific targets for credit controllers that will encourage them to work hard to achieve them and, as a result, will maintain a positive cash flow for your business.
Set Clear Payment Terms
Businesses that deal on credit are often more vulnerable to declining cash flows because of late payments or other issues. They must set clear and standardized payment terms and plans regularly to ensure that business cash flow targets are met.
Even businesses that only occasionally deal with credit should have a payment plan. If you are unsure about the payment terms yourself, it will be hard for your employees and even your creditors to correctly access the right time to pay. The payments will be delayed, which ultimately means a decrease in cash flow.
Thirty days is generally considered a good time to make a payment for many businesses. However, based on the type of business and market situation, you have the liberty to set your terms and conditions.
Generate Quick Invoices
Certain factors to improve the cash flow of your business are in your own hands. If you are efficient, the cash flow will likely be positive. Invoicing your clients is one of the deciding factors, and the sooner you do it, the better. Typically, a client will take a week or two to clear the generated invoice, and if it is delivered late, you must expect a further delay. Therefore, set up an automated bookkeeping system that automatically generates and sends invoices right on time to unaffected your business cash flow.
Install Easy Payment Options
Offer your clients the quickest and easiest ways to pay you. Online payments are a better option than checks as they take more time to show up in your bank account. Linking your bank account with accounting software will make it easier for you to keep track of cleared and pending payments. It also allows for quick transfers as banks already have all of the information needed to ensure a safe transaction.
Cloud-based accounting software is a great time saver for businesses, as it has brought efficiency to almost every business function. Tracking the cash flow of your business is just a click away with the help of this software. You can see, filter, and prioritize credit payments, depending on your need, from anywhere.
The ease of accessibility offered through these cloud-based accounting services is unmatched. The data is automatically backed up, so you don’t have to worry about any loss or theft. The fact that everyone in your company has access to all of the information at their convenience automatically speeds up the overall process.
Using technology in your business operations, you will observe that the business cash flow has also increased considerably. About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.