Maintaining a reliable stream of available cash for your business is essential for running it properly. Yet, the overwhelming majority of small business owners have experienced cash flow problems at some point in their business’s history. Recent statistics suggest that 80% of small business owners have cited cash flow problems at some point, and almost half of them said that their cash flow problems came as a surprise. Good financial management depends upon a reliable and consistent cash flow; some tips to consider if the flow of cash has become difficult to maintain or predict:
One of the biggest contributors to cash flow problems is a backlog on receivables. If your business is owed money from clients, you can reduce the amount of lag time by improving your invoicing system and, when possible, incentivizing early payments. Many people wait to pay for things as long as possible, which slows down your business’s ability to keep revenue at a steady level. Now is a good time to review your invoicing system to make sure that you are sending invoices to clients promptly and efficiently, and that the program you’re using also issues follow-ups and gentle reminders when payments are not received. Time you have to spend chasing down late payments is valuable time wasted—time you could have spent on other areas of growing your business. If you can request deposits from customers in advance or offer discounts for early payments, you can shorten the gap between product delivery and payment receipt and thus create a more reliable cash flow stream in sync with your financial forecasts.
Your cash flow is improved by receiving your owed money promptly, and hanging onto the money as long as possible gives you more to work with each month. Good bookkeeping keeps you up-to-date on your accounts payable, and while you should always be mindful of payment due dates, staggering your payments when possible helps prevent a sudden drain on cash available. Overdue payments on your bills incur fees that are a waste of money, damage your reputation, and may hurt your credit, so they are to be avoided at all costs. But staggering payments to best suit your cash flow each month can help keep your stream of money at a level that is more predictable (and less stressful).
In spite of all the electronic payment options around, checks remain one of the most widely-used payment methods among businesses. Unlike some newer payment innovations, checks are time-tested for security and efficiency and they give you a little more control over the timing of your payments. Since checks typically need a few days to travel through the mail, are not deposited right away by their recipients, and may require a day or more to clear at the bank, they can be a helpful tool for improving cash flow by creating short delays that let you keep money in your account a little longer. Online check printing and mailing services can have your customized business checks printed on demand and then out in the mail the same day they are ordered.
Online accounting software is widely available to businesses that are running into cash flow issues. Accounting programs can run cash flow reports for you and keep you up-to-date on your cash reserves and your payables and receivables so you know where your money has been tied up, for how long, and how much incoming money is owed but still outstanding. Many online accounting and bookkeeping programs for small businesses are very affordable, secure, and can be customized to businesses of any size. Checkeeper automatically integrates with many of the most popular accounting software programs available so that payment data need only be entered once and is imported and updated across all channels for the most accurate and up-to-the-minute financial reporting.