As a small business owner you need cash for investments, growth and operations. You have to find ways to keep it flowing and make it work for you. Doing so allows you to maintain financial flexibility and enables you to plan for the future while addressing present needs.

 

Here are some small business cash flow tips for you.

 

Avoid Idle Cash

Improve your cash flow by investing idle cash. This can come in different forms, one of which is by transferring cash from a non-interest generating account to one that is interest-bearing. This is a conservative approach to making money work for you. You also have the option to invest your cash in expanding your small business. Buy new technology that improves business processes or add a new location for your store, restaurant or shop.

 

Improve Accounts Receivable Collection

 

One of the ways to improve net profit and cash flow is to reduce the time it takes to collect accounts receivables. Give customers incentives to pay early such as discounts and better payment terms. This keeps cash flow positive and allows you to settle dues on time.

Another approach to reduce effort and time spent on collecting is to provide customers different payment options. Cash is king but you can also support online debit and credit card payments.

 

Effective Accounts Payable Management

The way you manage your accounts payable will either have a positive or negative impact on your cash flow. It is important to automate tasks to improve efficiency and eliminate or at least reduce mistakes in your accounting books. Identify invoices that require immediate payment. Negotiate the terms of payment with your suppliers. Some may offer you 30 days, 45 days or longer depending on your company’s reliability to pay on time.

 

Outsource Tasks

Keep your cash flow positive by outsourcing some tasks. Look for third-party agencies to do bookkeeping, some sales and marketing, IT, and market research for you. This allows you to reduce costs and direct cash towards the growth of your small business.

 

Create a Cash Forecast

A forecast allows you to plan for the daily, weekly and monthly cash needs of your small business. Excel is more than enough to make a list of inflows and outflows for your cash forecast. Input information such as receipts from customers, vendor payments and payroll. This enables you to forecast the needs of your staff and which bills need payment immediately. This allows you to monitor your cash flow and determine if it needs improvement.

 

These are just some small business cash flow tips you can implement to make your cash work for your company. Efficient management and use of cash enables you to take care of the present needs of your company, while planning for its future. If you need assistance with bookkeeping, you can contact us at Robookkeper via [email protected]. You can also review our virtual bookkeeping services, if they are within your budget.