How to Avoid Cash Flow Management Mistakes
Being a small business owner is not for the faint of heart. Small business owners deal with a wide variety of problems every day as they always have their hand in more than one bucket – sales, marketing, customer issues, bookkeeping and accounting – the list is long! No matter what the issue, having a positive cash flow is the key to solving almost any problem a business owner needs to deal with.
So how does a small business owner learn the ins and outs of properly managing cash flow? Well, there are courses you could take or good old fashioned trial and error, but outsourcing a bookkeeping service is a sound investment for any business that wants to regulate their cash flow. Why? Because if you are spending too much time working IN your business, you don’t get enough time to work ON your business. Working on your business is how you get your business to grow. Finding skilled accounting services for your business or outsourcing bookkeeping service is a lot easier than trying to find more hours in a day!
A good bookkeeping service can help you avoid cash flow mistakes by setting up the following strategies:
Anticipating future needs: If you use technology or equipment in your business, you can predict that you will need to repair, upgrade or replace it. Plan to save money on a regular basis so that you don’t need to draw out a large amount of money from your regular cash flow – this can take months to recover from! Putting away a small contingency fund for emergencies can also help keep your cash flow regular.
Getting invoices out promptly: If you want people to pay you, you need to give them the tools to do so! The faster your invoice gets into their accounts payable cue, the faster you will get paid. Invoicing can be a time consuming task though, so if you outsource bookkeeping services, this is another task they can take on.
Train your customers and follow up on past due receivables: Be clear about when you expect payment and that interest is charged on invoices past due. Have an established process for overdue receivables – when do reminder letters go out, when are phone calls made.
Maximize cash inflows: Consistent processes can help bring in cash faster and with predictability. Businesses do well to seek out the counsel of an accounting service to help them create options such as requiring security deposits up front, layaway programs or differentiated pricing based on payment options (lower prices for customers who pay up front, in cash, etc).
Minimize cash outflows: Don’t get wrapped up in impulse buys or having to buy new. Seek out used equipment or take the time to find out the cost of repairs. Delay new purchases as long as you can.
Growing your business and finding continued success can be hampered by a poor cash flow. All the hard work you’ve invested in your business can be supported by a bookkeeping service that can help you build a strong and sustainable cash flow. Since positive cash flow is a key marker for success, isn’t it time you contacted someone to help? Call us at 647-668-9363 to set up a consultation.