Cash Flow Survival Tips For Small Business

A business cannot survive without a steady flow of cash. In spite of the profits it makes, the lack of cash flow can result in losing your business. Why is cash flow management important? How can business owners ensure that there is enough money for future investments and monthly expenses? Proper cash flow management is the secret to having a steady cash flow. Sure some businesses have secret sauce to ensure survival, but there are simple rules that are crucial to the survival of every company. If you manage your cash flow intelligently, you will be able to reduce error, plan for the future and manage your company’s spending habits. A few survival tips will not hurt:

Track, track, track

Handling your finances requires tracking everything so you will know what is coming in and what is going out. Simple oversights will result in losing track of your expenses. Tracking everything means you should monitor how much you are spending on company lunches and travels in real time. When you have a real-time view into cash flow, you will be able to have the ability to manage your cash flow efficiently.

Gain deeper understanding of your financial data

It is not enough that you generate a financial report because you should also understand whether or not your business is running smoothly. It is easy to misunderstand data unless you scratch beneath the surface. Got some questions? Ask your bookkeeper rather than assume that everything is doing perfectly fine. When information is outdated, the chances of making costly mistakes also increase. Make it a habit to consolidate your financial data to get accurate information. If you obtain financial information from multiple sources such as handwritten files, excel spreadsheets and some online tools, you can get confused in the long run.

Automate bookkeeping processes

Another reason your cash flow management is in chaos is due to manual bookkeeping processes. There are aspects of bookkeeping that you need to automate such as generating invoices. As your business begins to grow, it will be difficult for you to track clients who have and have not made payments. Automation bypasses the tedious process.

Evaluate spend

Are you doing good at spending? Do you always see to it that you renegotiate contracts and get a real-time view of your cash flow? If you want to drive growth, you need to know how to spot business trends. It is also necessary to formulate strategies that will improve your overall business performance. Costly mistakes can affect your business. However, if you are well-prepared, there is no other way to go but up.

Are These Cloud Accounting Myths Holding You Back From Using Cloud-Based Software

Let’s face it, it is rather safer to stay within your comfort zone than tread upon an unfamiliar territory. After all, old habit dies hard. However, technology constantly evolves and the first thing that comes to mind when talking about it is cloud. Although using cloud-based software is an innovative way to handle your bookkeeping and accounting tasks, it is still frowned upon by traditional bookkeepers for fear of becoming a hapless victim of new technology. While there are enthusiasts who are drawn to new approach, making the switch may require more than just changing technology, it should start with changing mindset. Here are some common cloud accounting myths debunked.

Myth #1: Cloud exposes data to hackers because it is online.

It is necessary for every business owner to ensure that classified information is stored safely. Some say that cloud makes data prone to breaches and attacks because it is online. The first thing you have to keep in mind to avoid security threats is to check the cloud service provider’s options and features. No two cloud accounting services are created equal so you need to take your time in searching for the service which has increased level of security.

Myth# 2: Cloud-based software is merely marketing hype.

Due to the proliferation of cloud technology, many skeptics dub it as marketing hype. If you are going to check the benefits of cloud accounting, you will realise that it has indeed lived up to its hype. With its ability to store and integrate data, it becomes a valuable collaborative tool for increasing productivity and reducing manual tasks. If you to gain an accurate overview of your cashflow, you can always rely on cloud-based accounting software to update your information. Many business owners are already investing a vast amount of money in order to improve their cloud infrastructure because of its long term benefits.

Myth #3: Cloud-based accounting software is only intended for storing data.

Cloud accounting is not specifically designed for storing information because it can also provide a different approach to collaboration. In the past, it seems challenging to retrieve information critical to decision-making if you rely on spreadsheets. You are not 100% confident that the data you obtained guarantees accuracy. Anything that is stored in the cloud infrastructure can be updated regardless of your location. Even if you decide to check your financial data in the middle of the night, time is not going to be an issue. It saves you from being chained to your desk to manage a bookkeeping or accounting task.

Small Businesses: Tips for Improving Your Cash Flow

achievement-18134_1280If you are currently managing a small business, then I am sure that you are always looking for better ways to manage your finances, particularly your cashflow. This article provides some tips on how you can improve your cashflow in terms of managing suppliers, customers, inventory, and forecasting.

Managing Suppliers
When it comes to dealing with your suppliers, the number one tip is to pay them on time as much as possible. If the situation allows, you could also ask them for credit terms, which basically provides an interest-free loan for your business. Likewise, do not hesitate to ask for a discount or a good deal, especially if you order in bulk or make your payments early. In case you are not able to make a payment on time, communicate with your supplier as early as possible in order to set a formal agreement about the matter. Generally, the main purpose here is to maintain a good relationship with your suppliers.

Managing Customers
The secret to effective customer management is good communication. Whenever you have a new customer, always make sure that the payment terms are clear to them, and that your banking information is stated on your invoices. It is also a good idea to conduct a credit check on new customers, just to be sure that you do not run into any problems. In cases of large transactions, do not hesitate to ask for a deposit or set up a progressive payment schedule with your customers. Meanwhile, if you come across non-paying customers, the best thing that you can do is to offer them a payment plan that will eventually clear their debt. More importantly, regardless of the type of of customer that you are dealing with — be friendly.

Managing Inventory
In terms of inventory management, the two things that you need to watch is your profit margin and stock turnaround. Take a look at your products, identify which ones are making the most profit, and focus your time and investments on those items. Similarly, identify which products are “slow-moving” and come up with a plan on how to move them out as fast as possible. The money that you make from moving out these obsolete stock can eventually be used to invest on your more popular products.

Forecasting Your Cashflow
When it comes to forecasting your cashflow, what you can do is to search for a simple forecasting template and learn how to use it. By doing so, you can analyze your sales as well as identify patterns on when sales are at their highest and lowest.

By considering the ways in which you manage your suppliers, customers, and inventory; plus by learning how to do some basic forecasting — you will find that your cashflow will eventually improve in the long run.

Understanding Your Finances: Why Such A Big Deal?

The financial aspect of your business should be taken seriously because mishandling your finances can impact your business. Financial management includes accounting, bookkeeping, raising capital and cash flow management. Even if you are a small business owner, you need to make sure that your daily operations are monitored closely because one wrong move can make your business suffer. Although it is not a requirement for business owners to spend years studying the ins and outs of bookkeeping and accounting, understanding where money goes can make a difference.

3 Common Mistakes That Business Owners Commit When Handling Finances:

Careless spending. Avoid overlooking expenses because if there isn’t enough money to cover all of your business expenses, you will not be able to move forward. When you do not monitor your expenses, there is a tendency that it will pile up. When the time comes you need to make a payment for your bills, you lack financial resources to obtain cash from. Business expansion will not be impossible if you can deal with business expenses without worrying about falling behind your payment schedule.

Delayed payment of taxes. Taxes are essential to every business and it is important that you pay them in a timely manner. Since late payment of taxes can have a negative effect on your business, you need to create a financial plan in advance so you can keep track of your payment schedule and pay taxes.

Poor cashflow management. Managing your cashlow is also important and this should involve monitoring payment for insurance, phone, rent and many others. When you plan ahead, you will be able to know potential problems even before they arise. You should also be aware of cash flow gaps because they can also happen at some point.

Managing the financial aspect of your business is not an easy task especially when you need to take your financial obligations into consideration. Delayed payments are a sign that there is something wrong with your finances. You have to review or reassess your spending habits so you will know what could have gone wrong.

If you are struggling with your business finances due to mishandling your cashflow, it is time to identify the culprit behind because taking these problems for granted can have a negative effect on your business that is beyond repair. Your bookkeeper can help you put your business in proper perspective and help you maintain your cashflow so you can make timely payments and prevent your business from becoming a complete failure.