Cash Flow Tips to Make Your Business Thrive
Three cubic acres.
That’s the size of Scrooge McDuck’s massive hoard of money. You’ve seen the image before. A duck in spats jumping into a bevy of golden coins and backstroking. Now that’s a cash flow.
Whether you have $300 trillion at your disposal (the value of Scrooge’s coinage, as estimated by Forbes) or $3,000, having a handle on cash flow means you’re better armed to keep your business alive and kicking.
And these are the tools you need to jump into your proverbial pool of money.
Make it easier to pay and get paid
Even though online payments such as ACH, EFTs, and eChecks are on the rise, a report found that almost half of businesses still rely on paper checks for payments. That’s right. A tool that traces back to BC still runs a critical business process.
You might say, if it’s ain’t broke, don’t fix it. But the problem is that paper wreaks absolute havoc on cash flow. Armageddon-level havoc.
Paper checks take time to print, sign, stuff into envelopes, mail, and clear. Paper invoices eat up time and resources with similar, labor-intensive processes. It takes a while to get paper payments—both AR and AP—from point A to point B (and even longer before they impact your finances.) Meanwhile, your cash flow is waiting dejectedly for accurate information while you’re trying not to yell at an animated duck.
Go digital. Here’s why:
1. Online payments will reflect in your balance immediately. There’s no guessing game about when a check to a vendor will hit your account.
2. Invoices get to customers faster. Since they’re digital, they can reach the customer immediately—no waiting for printing and mailing.
3. Customers can pay online via EFT or ACH transfers or credit card, forgoing the time-heavy processes of paper-based review and checks. And you won’t have to make a bank run or wait 30+ days for payments. The customer clicks a button and authorizes payment, and it lands in your account.
Unite accounting solutions and apps
Activities that affect your cash flow occur in different systems that aren’t talking to each other. You can only get a partial idea of what’s happening.
Integrate your accounting solutions and apps. QuickBooks, Xero, NetSuite and more serve an important purpose. But if they don’t have all the information, they can’t accurately present your cash flow. If you use other accounting apps like Bill.com, Expensify, Tallie, and Hubdoc, connect them to your accounting solution so that information automatically syncs between systems. For example, when you pay a bill with Bill.com or collect a payment that information carries over to your accounting system.
Added bonus—you don’t have to bother with manually inputting information from one system into another. Who has time for data entry? Not me. And probably not you.
Capture a real-time snapshot of your finances
You’re up to bat. The pitcher throws. You swing...a month later?
For companies, outdated tools like paper checks and invoices can impede cash flow clarity. That leaves your cash flow in limbo—deceptively flush or anemic.
Whittle down the moving pieces—and the time they take. When you adopt digital payments and processes, accounting solutions capture activities as they happen and reflect the real-time status of your cash flow. That amount in your bank account? Well, it’s going to be that much closer to perfect as it reflects ACH transfers and customer payments without a 45-day wait for end-of-month reports.
You’re waiting for customers to pay. Did they get the invoice? Did they pay? Why haven’t they paid? Did someone call them to remind them to pay?
Meanwhile, your cash flow is dwindling into a negative polarity. Waiting for payments is, well, subpar.
Welcome your new best friend—recurring payments.
Automatic payments are commonplace these days. Take a look at your personal spending and you’ll probably find debits each month covering everything from Netflix to utilities.
Customers are used to automatic payments. Talk to them about it and you may be surprised at how many welcome the idea.
Use the automation advantage in accounts receivable solutions. You set up invoices to send automatically. Your customers authorize automatic payments. That way, on the first of the month (or whatever day you select), your customers’ payments land in your banking account. No fuss, no muss. You have payments already collected and waiting for you.
Make it easier to access
You want to keep a continual eye on your cash flow, but it’s hard to check because it’s tied to a specific program, computer, or user. In short, you can’t get at it whenever you need it.
Adopt cloud-based accounting technology solutions. You can access your secure information via PC, laptop, smartphone, or tablet. You can check your cash flow and activities with a mobile app and a few taps. You have the information you need when you need it.
Bonus tip: Use the past to prepare for the future
It’s hard to anticipate the ebb and flow of cash flow over time.
Don’t neglect your historical financial performance. When you move to digital processes, this type of information is much easier to identify. Perhaps you have a particular segment of the year that is consistently busier than the rest of the year. Perhaps you have contract renewals and negotiations that land close to the same time that will impact cash flow. Use past data to get a feel for any recurring cash flow behavior and let it guide your long-term planning.
Be like Scrooge McDuck—take the steps to control your cash flow and jump into that golden pool of money.