If cash-flow concerns keep you awake at night, now is the time to get the right tools to regain control.
How you manage your books is critical. Not having a system that warns you about cash-flow problems is a major reason why businesses fail.
Although there are different approaches, accounting software is more efficient than a manual set-up or spreadsheet, particularly software that is cloud-based such as QuickBooks Online. It streamlines processes and provides more visibility on how your business is doing, making it easier to manage and improve your cash position.
Get Paid Faster
You need money to flow in promptly for better cash flow. With cloud accounting software, you can invoice online immediately whenever you have completed a job or dispatched your goods. You can schedule recurring invoices for regular customers too. Another common feature is invoicing via email, which saves you time and the cost of sending paper bills. Keeping up with your accounts receivable, or the cash your customers owe you but have not yet paid, will help you manage your business better.
Settle Your Debts
While keeping money in your business for longer is good for your cash position, you need to avoid paying late charges to your vendors and suppliers and weigh up the cost of missing out on early-payment discounts.
More than just a place where you enter and pay bills, accounting software tracks what and who you owe, reminds you to take action as due dates approach and schedules payments.
You can prevent cash-flow issues by planning for outgoing payments in advance. Accounting software has built-in reporting tools that provide insight into what your regular business costs are, how they impact on cash position and whether you are spending too much. Keeping an eye on your small business financial statements is much easier when you’re not trying to wrangle messy spreadsheets.
Most accounting applications provide an accounts receivable ageing report, showing who owes you, how much they owe and the age of their debt. Not only can you start chasing payments earlier, this knowledge enables you to optimise trading terms and make decisions around early-payment discounts or late fees.
Reducing stock on hand can strengthen your cash position by saving you from outgoings on storage and inventory that you can’t sell immediately.
Good accounting software can assist with inventory management by:
– Reporting stock levels and their value
– Tracking stock items
– Identifying bestsellers so you can focus on products that are popular
– Identifying slow-moving items so you can eliminate them from your product offerings
– Working out which items generate the most profit
While accounting software won’t directly solve your cash-flow problems, it will give you a good idea of where to focus your attention.