Boost Small Business Cash Flow

Having the right accounting software can help you improve cash flow for your business. Let’s take a look at some of the main features and components that a good accounting solution will provide to aid you in increasing your business cash flow.

Cash, or working capital, is the lifeblood of any business, the air that keeps a business alive and functioning. The problem for many business owners though, is that they’re unaware of how much breathing room they have.

If your cash flow suddenly dries up, you can be left scrambling to meet payroll requirements, often having to make the tough decision of letting employees go, or shutting down important departments.

Here are some of the top ways that your accounting software can help improve cash flow and cash flow management for your business:

Analyse Budgets & Establish Cash Flow Projects

Operating a business without a budget is much like starting a business without a business plan, or entering the wilderness without a map – while it may make things more exciting, you’re likely to get lost along the way!

With this in mind, good accounting software should make it possible for you to easily put together a budget, presenting you with great accounting reports that can better help you visualise and analyse your budgets each month.

Besides making it easier to create and analyse your budgets, great accounting software should also give you the means to establish cash flow projections.

These account forecasts can play a huge role in helping you to analyse the cash you have coming into your business, providing you with vital data that can be used to better improve cash flow.

By listing all the fixed and variable costs and revenues you anticipate over the coming financial period, you’ll be able to easily notice any likely dips expected with your cash flow.

A business owner should never underestimate the importance of accurate cash flow analysis.

Michael Dell, founder and CEO of Dell Technologies said it best with the following quote:

“We were always focused on our profit and loss statement. But cash flow was not a regularly discussed topic. It was as if we were driving along, watching only the speedometer, when in fact we were running out of gas.”

Send Invoices Immediately

Another painfully obvious way to improve cash flow is by speeding up your cash inflows, but how does one do this, and how can accounting software help?

The faster you send out your invoices, the quicker your cash will come in!

Great accounting software typically has the built-in feature that enables you to quickly and easily email your invoices to your clients, directly from your accounting software.

By creating branded invoice-send email templates within the accounting software, you can rest easy knowing that your documents will be sent quickly, without compromising your brand’s look and feel.

Another thing to keep in mind when analysing and working to improve cash flow is that the majority of customers are notorious for stretching credit terms. This means that just because your invoice has been sent, doesn’t mean that payment has been received.

Be sure to factor this in when creating budgets and analysing your cash flow. Use your accounting software to track unpaid accounts.

Work to train your clients to pay invoices on time, this can be achieved in various ways, which we’ll discuss below.

Train Clients to Pay Invoices On Time

While this is often something that is easier said than done, there are various practical strategies that can be adopted to encourage your customers to pay invoices on time.

One of the easiest ways is to follow up with invoice reminders. Many accounting software solutions have built-in invoice reminders, with specific templates that can be used depending on the payment terms.

Be sure to send invoice reminders a couple of days before the invoice is due, as well as on the day that it’s due, and then again a few days after the due date.

Another great way to improve cash flow and train your clients to pay invoices on time is by providing them with customer payment incentives.

This is typically done through Settlement Discounts, offering a discounted price if they pay before the specified date.

Your debtors won’t want to miss out on any deals, and should therefore be much more likely to prioritise your payment as a result.

Another possible strategy to incentive timely invoice payments is by implementing a late payment penalty.

By implementing clear payment terms and payment deadlines you can train your clients into paying you on time. Be upfront about the penalty, and stick to it! These late payment penalties can be included in the terms and conditions section on your invoice.

Be sure to do some research on what late penalty policies typically look like for your industry before implementing your own.

Slow Cash Outflows

Your accounting software can also help you better enhance the efficiencies of your cash outflow, allowing you to keep more money in your business.

Use your Accounts Payable software to better track bills, using the features and analysis to answer the following questions:

  1. How much are we spending in a certain period?
  2. Are we paying it on time in order to avoid late fees and added interest?
  3. Are we making full use of the payment terms, settlement discounts and/or grace periods offered?
  4. Are we making use of bulk order rates?
  5. Are we making use of all the potential saving opportunities offered by our suppliers?
  6. Have I cut out any unnecessary expenses?

Build Loyal Customers

Another excellent way to improve cash flow is by boosting your customer retention rates. In other words, keep your clients happy so that they will keep coming back for more!

Other than offering great products and/or services, there are many different ways that you can keep your customers pleased.

Accounting software will often provide sales analysis reports – these reports make it easy for you to identify your most profitable clients.

With this data, you can introduce a number of VIP-type programmes, special discounts, or other incentives for these clients. Keeping them happy, as you smile all the way to the bank!

Some accounting software may even offer specialised 3-tier selling price options within their Inventory Control Modules. This will allow you to quickly and easily setup custom pricing for all your various client groups.

Another great strategy that can help increase sales and improve cash flow is offering special referral programmes. This way you can easily incentivise your loyal customers to further grow your business for you, through word-of-mouth and special bonuses.

Streamline Business Processes

The best accounting software solutions should help you not only save time, but also save money (and cut business and administration costs).

Software such as Win Accounting offers a full accounting and business management solution, and is designed with scalability in mind

This means that it has the ability to grow with your business, streamlining your entire business process and integrating seamlessly between the different accounting modules.

Besides eliminating the costs needed to migrate your data to a new accounting system down the line (if your business outgrows your current software), the right accounting solution can greatly enhance business efficiency.

Using your time more efficiently means that you’ll be able to get more done, spend less on wages, easily identify accounting errors, avoid late payment fees, and reduce excessive overtime pay – all playing their role to improve your business cash flow.  

“If I had to run a company on three measures, those measures would be customer satisfaction, employee satisfaction, and cash flow.”

Jack Welch, Former General Electric CEO

Improve Cash Flow: Start Using Win Accounting Today

Win Accounting is designed to unify and streamline every facet of your business!

With an easy-to-navigate user interface and a reduced learning curve, this accounting software solution allows you to spend less time training, and more time focused on your business.

Better visualise your company data, and use the accounting reports to analyse and connect with your business processes.

Make use of the time saving and cost cutting features to help improve your cash flow.

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