Fix The Cash Flow Dilemma With Proper Accounting
Out of all the issues that small business owners face, one of the most serious concerns will pertain to cash flow. If you do not have control over your cash flow, your business will fail! You need to make sure that you are working towards control over invoicing and collections to have the money at hand when you need it. With so many day-to-day economic predictions of doom, it is hard to know when you should consider investing money into equipment! The truth is as long as you can keep control over the business finances and you know what you are doing, you will have plenty of money in cash reserves and you can use this money to help you expand the company. This money will also be beneficial as you can lean on it for times of hardship instead of needing credit cards.
To help you out with the cash flow concerns, here are some great tips that will be able to help you improve your cash flow and to make sure that your organization will become successful:
- Purchase a good bookkeeping program. There are quite a few on the market. For small businesses, QuickBooks continues to reign supreme. You need to look at the costs and to see what you can and cannot afford when it comes to the right program and to know how easy it will be to learn. Managing the books will need to be done on a daily basis, make this a priority so you can prevent failure!
- Do a weekly or monthly cash flow analysis. You also need to be able to see where the money is coming from and where it is going. A cash flow analysis is nice because it allows you to see everything. You can check on where money is being wasted (such as your inventory) and where you are doing well with the budget cutting and other things.
- Increase your aggressiveness on accounts receivables. Where are you losing money? The customers that are not paying you on time! You need to make sure you have a policy on how to collect the money and to get on this quickly. It is a good idea to start becoming aggressive when you are working on getting people to pay. How about having a policy of 50% of the invoice total up front and then enroll them in an automatic bill payment program. This works effectively at getting people to pay. You might even consider rejecting anyone that will not pay in full. This is the only option you may have to ensure you will have the money.
- Extend the accounts payables by 30 days. When you work with your vendors to get a longer time to pay your bills, it gives you a little bit of extra time to collect money from your customers. This way you will have the money necessary to pay them back and you don't end up dipping into your cash reserves for it.
Daily accounting is the best way to know the situation that your company is in. You want to focus on being able to get your customers to pay on time and to make sure that your employees are doing their part to get people to pay along with looking for ways to save money. Reducing the amount of money you pay on raw goods is just one way in which you can save money and potentially help with the cash flow concerns your company has dealt with. Good accounting is one of the keys to a successful business!