Managing cash flow made easy

Soon, you can use the Cash Flow Center to manage your business finances, forecast your cash flow, and get actionable insights, in one place1.

QuickBooks Online Payments Cash Flow
coming soon

Effortlessly manage your business cash flow right in QuickBooks

Effortlessly manage your business cash flow right in QuickBooks

See your cash flow projection

Stay prepared by forecasting money-in and money-out transactions over 30 and 90 days. Your data imports and syncs automatically for up-to-the-minute cash flow analysis, without multiple spreadsheets.
cash flow projection
cash flow projection
cash flow projection

Proactively plan for the future

Stay in control of your finances with the QuickBooks Cash account2. Use it to set aside funds for non-negotiable expenses (like payroll and taxes) in envelopes. Get customized, data-driven financial insights to help you make informed business decisions.
Proactively plan for the future
Proactively plan for the future
Proactively plan for the future

Access funds fast

Spend funds as soon as they hit your QuickBooks Cash account. Withdraw cash from an ATM, use ACH bank transfers, or spend funds with your QuickBooks Debit Card2. Use it anywhere Visa® debit cards are accepted.
Access funds fast
Access funds fast
Access funds fast
      

Since we started using the QuickBooks Cash Flow Planner, we no longer rely on tracking this manually in a spreadsheet. It saved us a lot of time and frustration and gives me the knowledge that I need to make decisions.

Kristan Shamus, Owner, Cora Bella Weddings & Events

      

I used insights from the QuickBooks Cash Flow Planner to decide I was able to hire my first employee. I assessed my cash flow, and the Cash Flow Planner confirmed that I’d be able to support an employee.

Joao Correia, Solutions Director, Igloo Analytics

Frequently asked questions

The beginner’s guide to cash flow

By Kathryn Pomroy
Think of cash flow like your car’s gas tank. You fill up the tank with gas, and it empties as you drive. The goal, however, is to always have enough gas in your tank so you never run on empty. In the same way, cash flow is the movement of cash in and out of your business and your bank account. Cash inflows are your sources of income, and cash outflows are your business expenses. Naturally, positive cash flow is better than negative cash flow.

Why is cash flow important to your business?

For small business owners, positive cash flow is the goal. You want to generate more money than you’re spending. This sounds simple, but plenty of profitable businesses run into cash flow problems. It can be challenging to balance regular business expenses — like salaries, rent, and technology updates — with the sporadic revenue and periods of negative cash flow that can come from seasonal patterns or investments in growth.
Achieving and maintaining positive cash flow is essential in a small business. In practical terms, understanding where your cash goes every month and how you can get more cash when you need it are the bare necessities to running a successful company. Understanding those parts helps you see how to manage cash flow and create a cash flow forecast.
To grasp the idea of cash flow, let’s take a look at a cash flow statement, how to read it, why it’s important, and what problems to avoid so you don’t find yourself and your business in a tight spot.

What is a cash flow statement?

A cash flow statement — also known as a statement of cash flows — tracks money in and money out of your company. It will show how much cash a company has on hand and provide insight into a company’s liquidity. Public companies are required to release cash flow statements each quarter. You can see examples of cash flow statements from Nordstrom, Meta Financial Group,Inc., and Ford on Yahoo! Finance.
A better option for your company may be to download your free cash flow statement template from QuickBooks.

What goes into your cash flow statement?

Cash flow statements, along with balance sheets and income statements help provide insights into a company’s finances. But business owners aren’t always sure how they connect.
The balance sheet gives you an overall view of a company’s finances. It’s split into assets, liabilities, and equity. The cash balance from a company’s cash flow statement appears on the balance sheet in the asset section.
The income statement shows a company’s revenue, expenses, and profit and losses (P&L). It will offer insights into a company’s profitability. The bottom line of your income statement is net income. Net income is used to calculate cash flow from operating your business. Also, any non-cash income from the income statement, such as depreciation, and non-cash expenses flow into the cash flow statement and affect net income.
Long story short, each accounting statement is important for understanding your company’s performance from all angles. The balance sheet and cash flow statement focus on the financial management of your company in terms of both structure and assets. Whereas, the income statement shows you which core operating activities generate the most income for your company.
Profits and cash flow are both essential aspects of a business. After all, for your business to be prosperous long term, you need to make a profit while also operating with positive cash flow. Keep in mind, however, that profit and cash flow are very different.

Cash inflows and outflows on your cash flow statement

Not understanding cash flow and poor cash flow management are among the leading reasons why businesses fail. That’s why understanding the cash inflows and outflows on your cash flow statement is so important if you want to keep your business up and running.
Cash inflow is the money going into your company. It may be from investments and financing or from sales. Cash inflow is the opposite of cash outflow, which is money going out of your business from things like payments to vendor or disbursements. For your company to be considered healthy, your cash inflow must be greater than your cash outflow.
On your cash flow statement, you will find operating activity, investing activity, and financing activity, in that order. Add together the total cash gained from or used by each of the three activities to come up with the overall change in cash for the period. Then add this to the opening cash balance to reach your cash flow statement’s bottom line, also known as the closing cash balance.

The difference between cash flow and profit

Although cash flow and profit are related, they’re quite different when it comes to accounting. You can see it most clearly when you compare an income statement to a cash flow statement.
The most significant difference between the two is that the income statement may be based on accrual accounting, whereas the cash flow statement is based on cash basis accounting.
But, even if you don’t handle your own financial reporting, it’s still important to know how both accrual accounting and cash basis accounting work so you can choose the best reporting method for your business. It’s also important to know that as long as your sales are less than $25 million per year, you’re free to use either.

Cash basis accounting

Cash basis accounting identifies revenue when it’s received and expenses when they’re paid. It does not recognize either accounts receivables or accounts payables. Many small businesses use cash basis accounting because it’s simpler to maintain. It’s easy to see when a transaction has been made or how much cash your business actually has at any given time by looking at your bank balance.

Accrual accounting

Accrual accounting, on the other hand, records revenues and expenses when they are earned, irrespective of when the money is received or paid out.
For example, if you paid $240 up front for a two-year newspaper subscription, your cash flow statement will show a cash outflow of $240 immediately. On the other hand, your income statement will break down the $240 into each individual accounting period, usually monthly or quarterly.
Think of it this way. Let’s say you started a company. After one year, you ran into cash flow issues even though your business was profitable. As a small business, you relied on invoices to collect accounts receivables from customers. As anyone who sends invoices knows, customers don’t always pay on time. Even though your company was profitable, according to your income statement, you were short on cash.
You may have had the best intentions but failed to make payment deadlines simply because you couldn’t manage your company’s cash outflow or cash inflow. The relationship between cash flow and profit will vary depending on the type of business. You can be profitable but have times of slow or inconsistent cash flow.
In other words, cash flow is the total amount of money moving in and out of a business at a given time. Whereas profit is the amount of money left over after all expenses are subtracted or paid.

How to calculate cash flow and read a cash flow statement

You can break down a cash flow statement into a simple equation:
image
image
The elements of the cash flow formula are:
    • Operating activities:Also called operating cash flow, operating costs show how much you’ve spent or made on a daily basis. It’s the amount of money your company brings in from any ongoing regular business activities, such as selling products, manufacturing, or providing a service. It is the most accurate assessment of how much money you’ve generated from your core business.
    • Investment activities: Also called cash flow from investing activities, asset investments show cash used to buy or sell long-term capital assets for your business. These assets may be equipment, property, machinery, vehicles, furnishings, or investment securities. Over time, you want to see that your business can pay for these investments with income generated from its operations.
    • Financing activities: Financing is cash received from or paid to lenders, other creditors, and investors (if you have them). For publicly-traded companies, this is where cash flow from the sale of stocks and bonds, payment of dividends, or repayment of debt capital is reported.
This cash flow equation will show you the changes in cash balances from one period to the next so that you can always stay on top of your company’s cash flow.

What causes cash flow problems?

Plenty of businesses have folded because they didn’t understand the difference between making money and managing cash flow. More often than not, cash flow is a challenge because income is sporadic while expenses are recurring. Although both affect your cash flow, sales aren’t a cash flow problem — that’s a sales or product problem.
A cash flow problem is when sales are good, but cash is stuck in inventory or accounts receivable, so it’s not there when you have to pay for inventory on-hand or rent. The cash is coming, it’s just not in the bank yet.
Controlling your accounts receivable is one of the best ways to increase cash flow. And there are plenty of ways to get paid faster. Even so, it’s not always easy. Tracking down late payments can cost you time and money that you might not be able to spare.
Obviously, the best way to stop mounting past due receivables is to not let them pile up in the first place. But, even that isn’t always possible. Some companies look at business financing options to relieve some of their cash flow burden. That too isn’t always a silver bullet.

Cash flow you can bank on

Solving your company’s cash flow issues typically comes down to getting all of your accounting in order. Now you understand the importance of your cash flow statement and know what cash flow problems to address in the short-term. You’re ready to look at your accounts receivables, review your company’s financial statement, and start managing cash flow for your small business. With all that, you can move to cash flow planning and setting up a cash flow budget. 
We hope you’ve decided on no more Excel spreadsheets and no more cash flow reports. That’s because you now know that positive cash flow is part of a comprehensive accounting process that can be automated and accessible.
Nearly every business that graduates from Excel to a cash flow app or accounting software like QuickBooks wishes they’d done it sooner. If you want to stay on top of your company’s cash flow, get your cash flow solution in place before problems arise. Your employees, your vendors, and your accountant will thank you.

The state of cash flow for small businesses

By Danielle Ernst
Cash flow is the lifeblood of success – small businesses and self-employed workers must constantly be aware of their cash flow status. And while money is the fuel that runs their business and next decision, it is also the reason they go out of business, it’s the thing they lose sleep over. To better understand the struggles small businesses and the self-employed face when it comes to cash flow, how it impacts them and their attitudes, Intuit conducted a study with Wakefield Research, surveying 3,000 small business owners of companies with 0-100 employees in the US, UK, Australia, Canada, and India.

The state of cash flow for small businesses

    • 69% of small business owners have been kept up at night by concerns about cash flow.
    • On average, US small business owners have lost $43,394 by foregoing a project or sales specifically due to issues created by insufficient cash flow.
    • More than half (52%) of US small business owners’ companies have lost $10,000 or more by foregoing a project or sales specifically due to issues created by insufficient cash flow.
    • Among those who reported issues, more than 2 in 5 (42%) of small business owners’ companies have experienced cash flow issues in the last year.
    • 61% of small businesses regularly struggle with cash flow.
    • Among those small business owners who have had cash flow issues, (nearly a third (32%) have been unable to either pay vendors, pay loans, or pay themselves or employees.

What’s driving cash flow problems for the self-employed and small businesses?

Managing receivables

    • A third (33%) of US small business owners estimate their company currently has more than $20,000 in outstanding receivables.
    • US small businesses average $53,399 in outstanding receivables.

Managing payments

    • More than half (53%) of small business companies invoice – billing customers for goods/services on a specific date, compared to 47% that utilize advanced payment – charging customers for goods/services before, or at the time of receiving them.
    • Nearly two thirds (66%) of small business owners report that the time it takes the money to process after receiving a payment has the largest impact on their company’s cash flow, compared to not getting paid by customers or clients within the terms of the payment system (34%).
    • Nearly a third (31%) of small business owners estimate it takes more than 30 days to get paid, for example, by customers, clients, vendors or banks. The average wait is 29 days.

Employee management

    • Among those who have had cash flow issues, more than 2 in 5 (43%) of small business owners frequently have been at risk of not being able to pay their employees by payday.
    • Nearly a third (32%) of small business owners have paid their employees late when at risk of not being able to pay their employees by payday.
    • More than 3 in 4 (77%) of small business owners who aren’t self-employed agree paying employees same-day would help their company manage cash flow more accurately.

Getting capital

    • More than 3 in 5 (61%) US small business owners have applied for a loan for their business.
    • US small business owners who work for themselves (71%) are more likely than those with 1-49 employees (39%) and those with 50+ employees (27%) to have never applied for a loan for their company.
    • Nearly 3 in 5 (55%) US small business owners have not applied for a loan for their business because they didn’t think they would need it.
    • Other reasons for not seeking a loan are interest rates were too high (29%), they didn’t want to make payments (23%) and they didn’t think they would be approved (19%).

Report reveals cash flow struggles

By Danielle Higley
For small business owners and the self-employed, few things are more important than getting paid. Part of this stems from tight margins; part comes from a smaller client base, which means fewer cash flow channels. When a client fails to pay on time or not at all, the financial fallout can be devastating—a challenge big box stores don’t often encounter.
That’s why it’s so important small business owners and self-employed workers have resources and plans in place to reduce the chances of not getting paid. But collecting payment quickly and accurately isn’t always easy. In fact, it’s the No. 1 challenge for self-employed workers.
Two recent surveys by QuickBooks of 500 self-employed workers and 400 small business owners looked into why collecting payment can be so difficult.* These survey results reveal some of the biggest struggles self-employed workers and business owners face when getting paid.

Late payments create cash flow issues

Late payments have a huge impact on a business owner’s ability to accomplish their goals, and unfortunately, such behavior is a common problem for both business owners and self-employed workers. Only 41% of business owners and self-employed workers say they’ve never received late payments. According to 8% of self-employed workers and 4% of business owners, half or more of their payments are late.

What is the longest small businesses have waited for payments?

image
Late payments have the potential to negatively impact self-employed workers in a big way. Over a quarter (30%) said late payments have prevented them from paying their own bills and have caused significant stress. Nearly a quarter have lost sleep over missed payments, and 22% said it has prevented them from expanding their businesses. Some workers (5%) said they’ve had to sell their house because of a late payment.

What impact do late payments have on self-employed workers?

image
image

Clients and customers often refuse to pay

Customers have a number of reasons for not paying their bills on time. Sometimes they don’t have the money; other times, they’ve just misplaced the invoice and forgotten about it. But refusing to pay up at all? That actually happens more often than people might realize. According to survey respondents, 14% of self-employed workers and 10% of business owners have this happen to them every week.More than half of self-employed workers and business owners said they’ve had to deal with clients and customers who’ve refused to pay. Less than half (35%) of self-employed workers and 37% of small business owners said they’ve dealt with this issue at least once a month.

How often do your customers/clients refuse to pay you for your work?

image
image
Knowing when to send out invoices could mean the difference between getting paid late or getting paid on time. More than half (51%) of business owners said the best time to send an invoice was upon delivery or completion, and they might be right. Those who chose this option were the least likely to have customers and clients refuse to pay. Nearly half (44%) of them said they have never had a payment refusal.

Why businesses aren’t getting paid and what they can do about it

Attempting to better understand what might cause a customer to pay late or not at all, QuickBooks used part of its survey to ask business owners and self-employed workers about their preferred forms of payment, their incentive programs for encouraging on-time payments, and their own self-sabotaging habits.
The point of this research was to try to better understand the potential contributors to this painful outcome of late or nonexistent payments, and to uncover a few options business owners may not have considered for achieving a better response. But how much control do business owners or self-employed workers have over when they get paid? And when it comes to possible solutions, do the benefits always outweigh the costs?

Are small businesses accepting the correct forms of payment?

In the digital age, it’s no surprise that businesses need to be ready to take multiple types of payments, from cash in hand to mobile app transfers. What might come as a surprise, however, is the most commonly accepted forms of payment are cash and checks. In fact, checks are just as commonly accepted by businesses owners as credit or debit cards. But do customers really want to pay with a check?

How do small business clients/customers typically like to pay?

image
image
According to the survey results, the answer is no. Or at least, not as often as they’d prefer to pay with a debit or credit card.
The point here isn’t that business owners should stop accepting checks—provided they still find value in offering this method of payment to customers. Instead, the goal is to help business owners better examine their own customer trends and decide for themselves if all the forms of payment they currently accept should be accepted. Are they leaving money on the table by not accepting a type of payment they hadn’t yet considered? Check out the data for yourself.

What kinds of payments do small businesses accept?

image
image

What kinds of payments do self-employed workers accept?

image
image
When making a decision about what kinds of payments to accept, business owners must weigh the pros and cons of each payment form. Taking credit or debit cards, for instance, can cost businesses between $35 and $40 a month, plus processing or transaction fees and flat fees. But if 38% of customers prefer to pay with credit or debit cards, can you really afford not to offer this service?
Most business owners would likely assume the most cost-effective method of payment is cash, but according to a 2006 study of 500 merchants commissioned by the Bank of Canada, that’s not entirely true.
The survey asked merchants about their perceptions of payment, then set forth to prove or disprove those perceptions, based on estimated threshold transaction values and potential risks or weaknesses. When looking at cash payments, for instance, the study considered everything from human error to robbery to the time spent preparing registers and ordering coins.
The Bank of Canada study used an average transaction value of $36.50 and looked at businesses of all different sizes and industries. They found debit cards, not cash, had the lowest variable costs, at 19¢. This was followed by cash at 25¢, and credit cards at 82¢. The report states, “Debit cards are the cheapest because the flat transaction fee is relatively low, while cash is more expensive because of the labor costs and the deposit fees (accounting for nearly 70% of total cash costs). Credit cards stand out as the most costly overall because of the relatively high processing fee.”

What tricks are self-employed workers using to encourage on-time payments?

Despite the frequency of late payments and the issues they cause, self-employed workers don’t send many payment reminders. Less than 30% say they send more than one payment reminder, and 41% say they don’t send reminders at all.
The majority (76%) of those who don’t send payment reminders say they don’t need to. They have other ways of dealing with payment issues. Here are some of their most common tactics.

Have self-employed workers used any of the following?

image
image
It’s interesting that 1 in 5 self-employed workers has gone so far as to hire a debt collection agency, pursue a lawsuit, or put a lien on a project to get paid. Of these, a lien is the most affordable method, as the costs involved are mere filing fees. Debt collection agencies, on the other hand, typically take a sizeable percentage of the debt or have a fee structure in place, based on how many delinquent accounts must be recovered. Finally, pursuing a full-blown lawsuit is likely the most expensive option, where even the most cut-and-dry case can rack up thousands, if not tens of thousands, of dollars in attorney fees.
There’s a common saying: An ounce of prevention is worth a pound of cure. If so few business owners are taking steps to incentivize clients to pay on time, whether through advance payments, discounts for early payments, or automated payment reminders, perhaps it makes sense so many have struggled in the past to get paid on time. Offering clients the option to pay in installments while the project is underway, then giving them a good deal for their trouble is certainly a better solution than chasing them down later.

Most self-employed workers aren’t too stressed

Despite not receiving a regular paycheck, and occasionally dealing with the fallout of late payments, most self-employed workers feel at peace with their career path, or at least less stressed than people might expect.
When asked about their level of stress, 23% of self-employed workers said they weren’t stressed at all, and nearly 50% said they had a healthy level of stress. That isn’t to say all self-employed workers feel relaxed about their current position. More than a quarter reported having an unhealthy level of stress, which could be more or less linked to their finances.
Nevertheless, when asked about their future plans, only 3% said they definitely wouldn’t be self-employed in the next five years, while nearly half said they definitely would be self-employed.

What do you self-employed workers see themselves doing in five years’ time?

image
image

Key takeaways

Getting paid late or not at all can have a substantial impact on small business owners and self-employed workers alike. It can prevent them from living comfortably, and prompt such consequences as having to borrow money or even sell their home to cover their expenses.
Bigger clients are more reliable than smaller clients, which makes a lot of sense, given larger clients often feel the impact of each transaction much less and therefore don’t push back or postpone their payments as often. In contrast, friends and family commonly give business owners grief by paying late, taking advantage of those familial ties.
In the end, most small business owners and self-employed workers may never be assured a regular paycheck, but neither will they have many of the common stressors of those employed in a 9 to 5 by somebody else. And judging by the number of self-employed workers who plan on staying right where they’re at for the foreseeable future, these entrepreneurial souls wouldn’t have it any other way.

Methodology

*In June 2018, QuickBooks commissioned an independent survey of 500 freelance/self-employed workers in the US and 400 business owners in the US to learn more about their challenges with cash flow and payments. QuickBooks welcomes the re-use of this data under the terms of the Creative Commons Attribution License 4.0, which permits unrestricted use, distribution, and reproduction in any medium, provided the original source is cited with attribution to http://quickbooks.intuit.com.
Find the QuickBooks plan that’s right for you
Offer terms
QuickBooks Online requires a computer with a supported Internet browser (see System Requirements for a list of supported browsers) and an Internet connection (a high-speed connection is recommended). The QuickBooks Online mobile app works with iPhone, iPad, and Android phones and tablets. Devices sold separately; data plan required. Not all features are available on the mobile apps and mobile browser. QuickBooks Online mobile access is included with your QuickBooks plan.
The QuickBooks Online mobile companion apps work with iPhone, iPad, and Android phones and tablets. Devices sold separately; data plan required. Not all features are available on the mobile apps and mobile browser. QuickBooks Online mobile access is included with your QuickBooks Online subscription at no additional cost. Data access is subject to cellular/internet provider network availability and occasional downtime due to system and server maintenance and events beyond your control. Product registration required.
This information is intended to outline our general product direction, but represents no obligation and should not be relied on in making a purchase decision.
Cancellation policy: There’s no contract or commitment. You’re free to switch plans or cancel any time.
Terms, conditions, pricing, special features, and service and support options subject to change without notice.

Features

1. QuickBooks Cash Flow Center will be initially available only for new QuickBooks customers.
2. QuickBooks Payments required to use QuickBooks Cash account. QuickBooks Payments’ Merchant Agreement and QuickBooks Cash account’s Deposit Account Agreement apply. QuickBooks Payments account subject to eligibility criteria, credit and application approval. Subscription to QuickBooks Online may be required. Banking services provided by and QuickBooks Visa Debit Card is issued by Green Dot Bank, Member FDIC, pursuant to a license from Visa U.S.A. Inc. QuickBooks products and services are not provided by Green Dot Bank.