A business can only survive if it’s earning money. If a business doesn’t have enough cash coming in, it can quickly run into trouble.
Cash flow is the lifeblood of any business. Because of that, every business owner needs to keep close tabs on their company’s cash flow to make sure they can pay employees and creditors on time.
It’s also important to properly manage the financials so you can predict expenses and income as accurately as possible. That way, if something unplanned happens, like an employee getting sick or an unforeseen charge for equipment repairs, you’ll be able to take action before things start impacting your bottom line.
Manage Accounts Payable Better Using Expense Tracking Software
Accounts payable (A/P) is the amount owed by a business to its suppliers. It’s a core element of cash flow, and having a system to track it is a must-have for any business owner.
Traditionally, A/P has been managed using paper receipts and Excel spreadsheets. Many business owners are still using paper receipts to manage their A/P, which is a big mistake. Paper receipts can get misplaced or lost, and they don’t provide much in the way of useful analysis. The entire process becomes even more frustrating when you have to pull together multiple receipts in order to perform an expense report for tax time or create a PO in order to pay your supplier.
While these methods work well enough for small businesses, they’re not nearly as accurate or efficient as an online expense tracking software solution.
Forecasting Your Business’ Cash Flow Needs Is Easier Than Ever
Cash flow forecasting used to be a complicated task saved for the most advanced of accounting professionals. These days, however, even solopreneurs can create some amazing cash flow forecasts using free online forecasting tools.
These tools are more accurate than ever before because they take into account historical data, financial reports, and current events. You’ll also have more control over the forecast itself since there’s no need to learn complicated software or hire an analyst in order to run it.
Improved Invoicing with Invoice Management Software
Improving cash flow means ensuring customers pay on time every single month. Along those lines, invoice management systems are absolutely crucial for anyone who bills their customers on a recurring basis.
Invoice management software does just that, it helps you improve cash flow by tracking when invoices are sent and receive payments. It also provides the ability to set overdue alerts so that nobody falls through the cracks and you can be assured payment is received in full and on time.
This makes it easier for small business owners to collect every dime they’re owed without having to worry about whether they’ll get paid or not.
Without having an accurate idea of how much money your business is bringing in or going out, it’s difficult to accurately forecast when you’ll need more money from the bank or when you can confidently pay yourself and other members of your team.
By utilizing digital banking products provided by your financial institution, it’s much easier for small businesses owners to keep track of their exact free cash flow numbers. These products make it easy to take pictures of receipts, categorize expenses in real-time, and easily integrate data from various apps into one central location so financials are always up-to-date and ready for analysis.
That way, you can accurately predict when your business will need more money or be able to cover payments without having to go through all of your paper receipts and accounting statements.
Time Tracking Can Automate Expense Reporting and Save Money
Finally, technology can help improve business cash flow by automating certain processes that used to be done manually. You can’t just skip expense reporting because it’s such an important part of managing your business’ money.
Luckily, there are simple workarounds you can use without needing to hire a CPA or expensive software to handle the workload for you. The first is time tracking software. Not only does this reduce the amount of time spent on tedious daily tasks like filling out reports, but it also ensures team members pay a fair share of expenses while maintaining accountability throughout the company.
If keeping tight control over cash flow is an absolute must for any small business owner, it’s absolutely essential that they utilize technology to help manage the entire process more efficiently.