Cash flow Management // 5 Great Ways Your Business can Ace it
Cash flow Management is the foundation of all businesses and a key to the long-term business success
Despite this, many business owners often find it challenging to accurately manage business cashflow.
In fact, a study by QuickBooks, “The State of Business Cash Flow” showed that the majority of businesses around the world (61%) struggle with cash flow management and nearly a third (32%) are unable to either pay vendors, payback pending loans, or pay themselves or their employees due to cash flow issues.
This is a regrettable – yet often avoidable – misstep when it comes to business expenses and expense management.
One major reason why there is a prevalence of cash flow management calamities is that most companies have a great focus on ensuring that all the other business aspects like branding and marketing are on point.
Well, not that there is anything wrong with this; after all, building great brands is one of the main reasons we go into business but having expense management solutions, expense reporting tools and strategies for managing finances are equally important.
Having these tools in place helps you build a profitable brand through billing in a timely fashion.
When accounts receivable start to peak, your brand might look great on paper, but you could be manning a sinking ship as money goes out the door faster than inflows in; rent payments, staffing costs, new inventory, and equipment are all expenditures you must continually consider, irrespective of your revenue levels.
So if your company seeks to remedy its cash flow woes and needs some practical advice on how to bolster its available means, here are a few yet easy tips on how to grow your cash flow and manage it:
Ensure you regularly Monitor your Cashflow.
The first step to getting it right is by ensuring you have the right tools for your cash flow management.
Monitoring your cash flow management regularly allows you adequate time to notice any loopholes that may require your attention instantly.
For the majority of businesses, regular assessment means having reviews that might happen on a weekly, monthly, or quarterly basis depending on the nature of the business.
Early-stage companies could benefit by keeping a closer eye on their cash flow daily, whereas larger companies with a success trait may only need a monthly cash flow assessment.
To help you keep an account of your cash flow as well as keep an eye on your finances on the go. you can use online accounting tools like Quickbooks or Xero. What’s more interesting is that the Boya Platform is already integrated with Quickbooks and Xero Platforms.
This ensures that you can easily download your expense or account statements from Boya in either format saving you the time needed to export a document on either platforms.
Do away with unnecessary expenses
As you monitor your cash flow, it is equally important to do away with unnecessary expenses.
You can do this by keeping track of recurring expenses. By doing this, you can pinpoint the unnecessarily high figures and find a way of cutting down on them. You can also look for the expenses that your business may no longer need.
These costs may include wages and salaries, suppliers’ costs, rent and rates, directors’ remuneration, and the purchase of new assets and other employee expenses, which, if not managed well, can quickly impact your bottom line. A platform like Boya enables a business to track all spending against set budgets in real-time, and track all subscriptions and all employee expenses in one place. This enables a business to identify rogue or unnecessary expenses in real time easily.
Take Advantage of Technology
As a business owner, you should take advantage of technological advances and artificial intelligence-enabled solutions, like new apps and software updates. These can streamline your business processes and increase efficiency. Although technology can help with any sector of your business, Shvarts specifically recommends using it to create budgets and project cash flow.
Making use of Expense Management Apps or softwares is another smart way to track the in-and-out flow of cash within your business or organisation.
While this can be a time-intensive task for busy business owners, you can lighten your load by using a mobile expense management software like Boya.
Boya, enables you as a business owner to gain a birds-eye-view through pragmatic tools like online receipt management, employee expense management, various expense reporting tools, digital receipts stored in a single location, and many other robust features.
The platform also allows you to set limits, track, freeze/unfreeze and decide where cards can be used. Limit staff spending by only using the amount loaded to their card.
With this sort of business expense tracking software, you can gain a more fundamental understanding of your business’s month-to-month cash flow; this is vital as things can fluctuate wildly.
In the digital age, there’s no reason not to take advantage of expense tools or expense report apps that simplify and streamline processes.
Keep on Top of Invoicing
Over time, unpaid invoices can add up and have a devastating effect on a business’s cash flow management. Therefore, it’s important to ensure you have the right processes in place to prevent this.
Adding late fees, for example, encourages prompt payments from customers and shows that your business takes late payments seriously. Furthermore, you can offer discounts as incentives for customers to pay their bills before the deadline.
Regular payment reminders can also prove helpful, as sometimes a customer has innocently forgotten they had an invoice due.
Additionally, consider payment plans if your late invoices are often for substantial amounts that a customer may find overwhelming to pay back at once.
While we understand that this can be quite tasking at times, the Boya Platform helps ease this burden by streamlining your supplier invoices linked to the team’s approvals, budgets, payments and accounting.
Through the Boya Invoicing management feature, you can be able to reduce the time it takes to close the accounting books, save time & money with one integrated invoice management platform as well as gain visibility into supplier payments in real time.
Build a Cash Reserve
With rising inflation and tightening of financing conditions, the recent past has ignited a debate about the possibility of a global recession. It is important that your business builds a cash reserve.
Cash reserves are important because they can help you protect your businesses by providing cash flow in the event that unexpected expenses arise or revenue drops. An emergency fund can help you cover expenses without having to get a loan or stack up credit card debt.
This is a great way to achieve cash flow management successfully for your business. This sum of money will act as a buffer for unexpected expenses, as well as a pool of money that may be drawn upon for strategic investments or opportunities.
A practical example of determining the minimum amount of money this cash reserve should contain could be calculating six months of your business outgoings, then putting this aside for a rainy day.