Home » Five Tips to Easily Manage Cash Flow Using Accounting Software

Five Tips to Easily Manage Cash Flow Using Accounting Software

Learning to manage cash flow takes time, but you can lower the learning curve if you have a little help. We’re going to walk you through some of the lesser-known tips on how to manage business cash flow like a professional.

1. Stay on top of payments 

Payments will impact your cash flow. One major mistake people make when using tools to manage cash flow is that they overlook their outstanding payments. For example, let’s assume you’ve been working with a client for five years.

You had a good business relationship, and the client had always paid on time.

Eventually, something happened, and the client started paying later and later. This is how customer insight tools become integral to your operations. Suddenly, you realize this client pays their invoices 45 days late a few times a year.

Unfortunately, these late payments negatively impact your cash flow.

If money isn’t in your account, it’s not part of your cash flow. It’s crucial that you chase down late invoices and send reminders as quickly as possible. If you don’t, the invoices may be sent late, causing your cash flow and cash position to struggle dramatically.

2. Stay friendly with lenders

What happens if your cash position is low or even in the negative? You’ll need to work with a lender that can help provide you with credit to pay your debts and leverage opportunities that occur every day in the business world.

You’ll want to:

  • Stay friendly with lenders
  • Build long-lasting relationships with lenders

When you’re friendly with lenders, you can alert them of unexpected outgoings and tell them of outlook changes.

Trust goes both ways in the business world.

Deep relationships with lenders allow you to secure financial assistance when you need it the most.

3. Watch your stock management

Stock management is one of the most important things you can do when trying to manage your cash flow properly. You’ll want to make it a habit to:

  • Reconcile stock when reconciling your bank account
  • Put a stock management system in place

Proper stock management will ensure that you’re not spending too much money on unnecessary stock. For example, if you have a warehouse filled with stock that won’t sell for a year and a half, you’re depleting your cash position with no means of recuperating it quickly.

You want to hold some stock, but if you go overboard, it will lead to negative cash flow.

4. Anticipate problems before they happen

Why is it important to manage cash flow? It can also help you anticipate problems before they occur. For example, if you have regular cash flow statements for your business, you can spot when cash flow is falling too much.

You should also try to anticipate problems with:

  • Customers
  • Suppliers

For example, if a major customer is ordering less or has been running late on making payments, you may run into cash flow problems. Anticipating these issues ahead of time will allow you to secure financing or take measures to keep your cash flow positive.

5. Tighten up on outgoings

Finally, if you want to manage your cash flow properly, you also need to know when to take the right measures. You may need to tighten up your outgoings to keep positive cash flow, and this may mean:

  • Paying bills in installments to allow money to flow into the business and stay solvent
  • Negotiating longer invoice terms with suppliers
  • Laying off staff
  • Negotiating new deals with suppliers to leverage favorable terms and save money
  • Eliminating small expenses that have a major impact on your cash flow over the month

Maintaining a LEAN business is something that every business owner should strive to do. You don’t want to overlook cash flow or neglect to run reports because you’ll never truly know your business’s cash position.

Additionally, cash flow management is something that you should learn and leverage over time.

Every business, even the richest company in the world, needs to work on managing cash flow. If Apple and Amazon run cash flow reports and work on managing cash flow, it’s something that every business should do to ensure that they’re financially sound.

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