Any business owner will tell you that managing business cash flow can be a real juggling act. Cash flow is one of the most common problems that cause business owners to lose sleep. Gaining control of your business’ cash flow will go a long way to improving your peace of mind and reducing stress.
So how do you improve cash flow management?
Identifying certain triggers in your business will make a significant difference to cash flow management.
- Invoicing your clients in a timely manner and collecting the payments in line with your trading terms is vital to your cash flow. The greater the amount your customer owes you the harder it becomes to collect.
- Analysing outgoing payments and noting when they regularly occur will go a long way to ensure strong cash flow. Some of the key areas to consider are:
- Payroll for staff
- Finance including loans
- Australian Tax Office liabilities
- Supplier payment terms and conditions
Visibility to your ongoing business costs means you understand the timing of these payments and can plan in advance their payment. Becoming aware of business costs and when they are due takes us to the next step: Awareness
Being aware of every cost to the business goes a long way to helping solve cash flow issues. Knowing the impact of these costs and outgoings will further help understand and improve cash flow management over the course of a month or quarter.
Managing your suppliers means more than understanding their payment terms. It means regularly reviewing their services to assess if they are still relevant for your business. If they are, then you should regularly review their services and provide feedback. This may be useful in managing increasing costs from your suppliers.
Other key triggers including being prepared for:
- Busy trading periods when staff payments, especially with casual workers increase
- Replacement or upgrading of equipment which may result in increased finance costs
- Bad debts due to customers going out of business. This can be managed by collecting payments regularly and minimizing the amount every customer owes you.
Cloud accounting applications can assist businesses large and small with their cash flow management. These are many options including:
- Invoicing online immediately the job is completed
- Selecting payment gateways that make it easier for your clients to pay.
- Placing your clients on one of the many forms of direct debit facilities.
- Using cash flow models that integrate with your cloud accounting software such as Vistr as this product is excellent at managing cash flow because it is simple and easy to use.
New cloud accounting software options such as Xero and QuickBooks Online are powerful applications that automate many business tasks and generate reports quickly, helping you understand your position better. Being securely cloud-based, these cutting-edge systems allow you to access information from anywhere on any device. Accessing real-time financial data gives businesses greater control and allows better business decisions to be made.