Improving your cash flow will help your business survive in a volatile economic climate. Accounting plays a key factor in managing the cash flow of your business. One great way to easily and cost-effectively manage your cash flow is by using accounting software. This is because accounting software can help slow your payables, without endangering your relationship with your vendors. It also helps obtain your receivables as quickly as possible. In addition to having bookkeeping and accounting software, you also need to think of methods to enhance your cash flow. Presented below are a few accounting tips to enhance the cash flow of your business enterprise.
Cash Flow Analysis
Before you start thinking of ways to enhance the cash flow of your business, you need to first obtain a comprehensive view of the way your business manages its cash resources. Analyze your inventory, credit terms, accounts payable as well as accounts receivable.
Most businesses rely on some form of borrowed credit in order to start up, or to keep their business running efficiently without worrying about delayed cash flow as a result of unpaid invoices from their clients/customers. Start up business loans and small business loans in Australia are a convenient way for businesses to get this funding as they are readily available from banks and private organizations around the country.
The accounts receivable of your business constitutes a large percentage of all cash resources coming into a business. Thus, it is vital to closely monitor them. You can achieve this by always knowing when client’s payments will be due. You should employ accounting software for this purpose because they are able to produce an accounts receivable report. This will help you track your client’s habits over time, thus, helping you identify which clients will likely need to be encouraged to pay up.
Do not wait for your clients to decide it is time to pay you. Set up a process for collections and invoicing. Make sure you do not deviate from the process you have created because the longer your customers owe you, the less likely or harder it will be for your clients to pay you. To collect your funds on time, ensure that the invoices you send to your clients have a due date on them and make sure you send a follow-up account within ten to thirty days from when the payment is due.
Make it simpler for your clients to pay
Issue your invoices promptly. If clients receive their invoices regularly and on time, the chances of you getting your funds quickly are greater. Ensure that your clients know precisely when it is time for them to pay you and offer them simple and swift payment options, for example, online and fax payment methods. You can offer them discounts, when they pay before the due date.
Monitor your outflows carefully because it pays you to keep your cash for longer periods. Ensure that your due dates are properly managed. One way to do this is by paying an invoice only when it is due. Doing so will help you maintain consistent cash flow. Paying early can reduce the amount of cash you have for urgent business transactions and hence, it is not a good idea. Have your payment periods extended. Bargain with your vendors; also try to reach an agreement in order for your payments to be spread out and your payment periods to be lengthened.