For your small business to succeed it is crucial to understand how to boss your cash flow.
Growing sales is often the top priority for small businesses. But shuffling through endless paper invoices to track down who owes you what can be problematic. Yet, you don’t want to compromise on healthy cash flow. That’s why having a clear view of your numbers is key.
A 2020 U.S. Bank survey by Jessie Hagan found that 82% of small business failures are due to poor cash flow management, majority within the first five years.
If you want to boss the financial health of your small business and establish better practices for managing your cash flow, here are a few things you should know to get paid on time.
Get your invoices right
If you want to set your business up for future success, taking control of your finances is essential—and it starts with invoicing. Send out invoices to your customers promptly. Be clear about your payment terms. Follow up promptly with late paying customers.
To ensure your books are accurate and up to date, switching from spreadsheets to an accounting software – such as Sage 50 or Sage Accounting – can help streamline the process for you. The cash flow manager feature in your accounting can provide a picture of the balances of your cash accounts, cash expected to come in, and cash expected to go out.
Automate your expense tracking
Would you believe me if I told you that you can maximize your time while tracking your expenses? Well, you should!
With automation, you can easily connect your bank feeds to your accounting software or use a receipt capture tool, such as AutoEntry, to eliminate manual data entry and automatically import your expense receipts, bills and invoices.
Become a forecasting expert
Put simply, sales forecasting is all about predicting what’s ahead so you can prepare for cash flow peaks and troughs. Knowing what curve ball may come your way and when will help you make cash flow projections like a boss. Think about your pricing, the level of competition, and be aware of changing economic conditions. And with real-time reporting and instant access to critical data from your accounting solution, you can better plan for the future and hopefully avoid unpleasant surprises.
Cut unnecessary costs and spending
When it comes to preserving cash flow, think lean and mean. Scrutinize every item you buy, know exactly where your cash is going and always get value for money. Work out what you really need, too— those office plants might look nice, but they won’t grow your business.
Connect with your team of experts
Sometimes the best thing you can do to boss your cash flow is know when to ask for help.
We know that you’re not an accountant and don’t expect you to always have your numbers in order. That’s why getting the right support is important.
Finding an accountant that really understands your business needs and gives you the peace of mind that the financial side of your company is safe in their hands is vital. Not only will they advise you on practical aspects, such as how to run a payroll, they can also help you create business plans and cash flow forecasts that might be vital for loans or grants.