You can run a profitable business, but unless you have cash flow under control your business may struggle. Online Accounting Software can help you manage your business and your cashflow.
In this blog post, we have put together some tips to set you on the course for improved cash flow.
Invest in a reputable online accounting package
Many small businesses are budget conscious and one of the mistakes they make is not using a good accounting software package. Taking it one step further and utilising an online accounting package, you'll be on your way to better manage your cash flow.
Daily bank feeds and accurate regular bookkeeping will mean your data is up to date allowing you to get a snapshot of where your business is at, at any point in time. Not just at the end of the year, or even sometimes 12 months later when your accountant prepares your year end financials.
This means you'll have a handle on your accounting information allowing you to make more informed decisions around your business' finances.
Packages like Xero and MYOB online accounting will provide you with just that and having timely information is the key!
Debtor management on the go
By using online accounting packages you'll be able to automate your invoicing to your clients and set the payment terms that suit your business.
You can even see when your clients receive, open and pay their invoices. Xero also has functionality to send automatic reminders to your clients if they're late in paying you too.
All of this means you'll spend less time on debtor management and get paid faster. You'll also be able to better manage your business debtors and cashflow with additional apps such as Xero Touch or MYOB on the Go.
These apps allow the convenience of mobile invoicing and contact management that syncs with your accounting software.
The apps allow instant creation of an invoice on a mobile phone or a tablet, even when you are out on the road. You can simply email the invoice to your client direct from your phone or tablet too.
Manage your supplier's payments
On the other side of the equation, businesses should manage the timing of payments of creditors too.
If you're paying your suppliers too quickly while clients drag out paying your invoices, then you will put your business under cash flow pressure.
Prepare a budget
Budgets are such an important part of running a successful business. Budgets are an estimate of how your business will perform in the coming year and the road map for your finances.
They set you on the path of achieving your goals by helping you make smarter decisions around your finances. Without one, it's so easy to quickly lose control of your finances.
At times, you may need to adjust your budget as your business changes or if unexpected expenditure arises.
Budgets can be made easy with the use of your online accounting package. They're very easy to setup, use and manage. Both Xero and MYOB have great reporting functionality that allows comparisons to your actual results so you can track how your business is going.
Prepare a cash flow forecast
A cash flow forecast helps delve into your business's incoming and outgoing funds over a particular time frame.
They will help you plan for those upcoming bills and other planned expenditure and plan for the timing of the outflows so that you don't overspend when cash is tight.
By monitoring your cash flow and reviewing your budgets regularly, you should be able to identify any issues early and make plans to avoid any tough times.
If you need a hand implementing an online accounting system, bookkeeping for your business or putting together a cash flow or budget, get in touch we'd love to help!