Ask most small business owners about their biggest capital constraints, and half of them will tell you that cash flow is a big concern. The Canadian Federation of Independent Business found that 50% of Canadian small businesses report cash flow constraints, making it hard to grow their companies.

If you're just starting to figure out how to improve cash flow, you'll quickly realize that payment timing matters. We'll show you how cash flow works, why payment timing matters, and what you should look for when evaluating payment platforms.

Table of Contents

• Why cash flow matters for small businesses
• Common cash flow challenges businesses face
• How instant deposits improve financial flexibility
• Ways businesses use faster access to funds
• What to look for in a payment platform that supports cash flow
• How Intuit QuickBooks helps businesses manage cash flow
• Build a stronger cash flow strategy with Intuit QuickBooks
• Frequently asked questions

Why cash flow matters for small businesses

Cash flow is the movement of money coming into your business and the outflow of funds spent to manage your company. Ideally, cash flow should operate smoothly so you can pay employees, purchase inventory, and use profit to grow.

There is an important difference between revenue and available cash. Revenue is the money your business brings in before expenses are paid, and it includes money that you haven't necessarily collected yet. Available cash is the money you currently have that you can spend.

If there are delays in receiving payments and your revenue is tied up, you won't have the available cash you need to operate your business effectively. For example, if you're waiting for a vendor to pay you for your product, you might miss out on an investment opportunity simply because you don't have access to your funds.

Common cash flow challenges businesses face

Your company might be a completely different business from the small business next door, but you probably face similar challenges:

• Customer payment delays mean you have less working capital available. For instance, if you're a trade contractor waiting on payments, you might not have the funds you need to start your next project.
• Payroll deadlines put pressure on your cash reserves. This is especially true with project-based billing, where you're expected to pay employees before completing the project and getting paid.
• Inventory purchases tie up your funds before you can make a profit. For example, a seasonal business has to buy supplies months in advance. Expenses will be higher until sales and income can catch up.

How instant deposits improve financial flexibility

Instant deposits improve cash flow by giving you faster access to your funds. Here's how quicker payments can help your small business:

• Payments are transferred instantly, which frees up your funds for immediate use.
• You're not waiting for money to hit your account, so you're able to schedule projects, seize investment opportunities, and pay your employees on time.
• Your business has better liquidity. This reduces your reliance on using credit cards or short-term financing to keep your business running.
• You have great financial flexibility and resiliency. Instant deposits allow you to make quick business decisions without waiting for funds to appear in your bank account.

Ways businesses use faster access to funds

Any business with employees is aware of payroll deadlines and the stress it can cause if cash flow is tight around payday. Instant deposits eliminate this challenge because you can access funds more quickly and even set up direct deposit for your payroll.

Instant deposits improve cash flow, which is critical in keeping your business operations running smoothly. You can prevent costly delays caused by missed payments while you're waiting on funds.

Having faster access to funds also frees up money for time-sensitive business opportunities. For instance, if you're approached about a partnership and need to invest funds, you won't miss out because you're waiting on payments.

What to look for in a payment platform that supports cash flow

When you're comparing the top payment processors in Canada, it helps to evaluate:

• Funding speed and deposit options
• Instant deposit availability
• Cash flow visibility and reporting tools
• Transaction tracking capabilities
• Financial dashboards and insights
• Integration with current accounting software
• How intuitive it is to use
• Payment acceptance options
• Fee structure and pricing transparency

How Intuit QuickBooks helps businesses manage cash flow

Now that you know what cash flow is and understand the importance of instant deposits, you might be shopping for a new payment processor.

Intuit QuickBooks is a trusted business solution that offers instant deposits as part of its payment software. It integrates with popular apps you may already use, offering you financial flexibility and helping improve your company's cash flow management.

Build a stronger cash flow strategy with Intuit QuickBooks

Diversifying your small business's payment methods to include instant deposits is a smart move. Instant deposits reduce administrative friction and give you more control over your company's funds.

Streamlining accounting and integrating other administrative practices can also free up time and resources. Improve your cash flow strategy with QuickBooks Payments.