Every business needs cash to survive. A small business owner must manage their cash flow to ensure that the business has enough money. Poor cash flow is one of the main reasons over 60% of small businesses in the United States fail within three years - despite their potential.
Effective management of cash flow is crucial for any business, while you may have good turnover and profit, but you may lack liquidity if you do not manage your cash flow in an efficient manner. Cash flow management essentially entails keeping a proper record of money coming in and going out. So creating positive cash flow is one of the most important things a business owner can do. Here are the top hacks for improving your business cash flow:
Develop A Plan And Forecast
Planning and forecasting involve you looking at your finances and then draw inferences for your future. While the task may seem daunting at first but with the availability of many software for cash management, your task may be eased to a certain extent. Record your opening cash and bank balance and all the inflows and outflows therefrom. When you start seeing a pattern, you will be able to forecast your future transactions. This exercise will allow you to plan your spending accordingly.
Be Clear On Your Payment Terms
Once you are very clear on your payment terms, it is important to communicate this with your clients or customers so they are aware of your expectations. e.g. if you want a payment on the day of consultation, communicate the cost of your service beforehand and how the client can pay. EFTPOS facilities or a solution offered by your accounting software provider are very affordable these days.
Hire A Bookkeeper
A bookkeeper can be one of the most important hires your organization ever makes. Hiring a reputable bookkeeper can help you regularly input and consolidate your incomings and outgoings, generate reports and form recommendations for your consideration. An experienced bookkeeper can able to think ahead and anticipate needs before they arise. They will have a good experience to understand the bookkeeping requirements of your industry.
Follow Up Unpaid Invoices
It’s very common for service-based businesses to run into cash flow problems due to the late payment of their invoices. According to Xero, more than 40% of invoices are paid late. Top business accounting software systems like Xero have an invoice reminder system that will automatically forward your customer’s an email when their invoice is coming up for payment, and/or when it fall’s past due. You can customize your message to be a little softer than the average late payment notice if you’d like to take a gentle approach.
Get Experts Either Internally or Externally
The old saying goes “cash is king”, so make sure if you don’t fully understand proper cash management practices to involve experts. In most cases, you can keep the cost low by only getting help when you need it. You shouldn’t have to commit to yearly contracts and most local finance experts will be happy to contract on a month-to-month or hourly basis.
Conclusion: Every business owner wants to make money, and make a lot of it if they can but it takes effort. In most cases, the solution to the problem can be insanely simple, outsource the bookkeeping and get the information fed to you in an easy to navigate format.
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We don’t just say it, we deliver – our work speaks for us! Contact us for 30 mins of free consultation and opt for our Online Bookkeeping Service.
Cloud Bookkeeping, Inc.
3281 E. Guasti Road, Suite 700
Ontario California 91761
Tel: +1 (909) 952-3804