Cash flow tips to help your small business

At some point, most businesses will hit cash flow issues, even with the best cash flow tips at hand. Sometimes businesses will delay payment to vendors and discount invoices as an incentive to get customers to pay faster. This may seem like a good solution. However, these temporary “solutions” can set the business up for even more cash flow issues. Improving efficiency in the accounting department is a small project that will take little time and can return great results. With a well-thought-out plan and using the technology your business currently has, you can set up some best practices. Here are some cash flow tips that will help your inflow and outflow of cash – if you apply them!

Tip 1: Frequent Projections for better cash flow reporting 

Make projections frequently. By closely monitoring critical cash flow data, you’ll be able to make better, more accurate and more up-to-date projections. You’ll be more likely to keep your business out of financial trouble. Your projection reports should be easy to create, save and auto-refresh with the most current data when you launch them. A sound accounting system will allow you to easily set up an “at-a-glance” view where you can select the data fields you want to see to make these cash flow projections. Of course, the query criteria will depend on the data that exists already in your system.

Tip 2: Customization for better cash flow management 

Every accounting system can manage debits and credits. However, not all systems allow flexibility to add unique information to your business practices. For example, when managing cash inflow (Accounts Receivables), expected payments can be projected by categorizing them as “Promised Payments.”  Moreover, the ability to create a series of payment statuses along with selecting a date (calendar field) will allow for more accurate cash inflow reports beyond what the traditional age buckets offer. As a result, creating projections based on when your clients say they will pay you versus your payment terms can help avoid cash flow issues.

Tip 3: Increase Payment Methods – Both Ways

AP: Decreasing the time it takes to pay your vendors can impact relationships. The use of paper cheques has been steadily declining in Canada, shrinking by roughly five percent a year, according to the Canadian Bankers Association. Electronic payment has become ubiquitous with advancements in payment technologies that enable services like wire transfers, debit payments, PayPal and Bitcoin. Setting up EFTs and paying vendors with credit cards can help ensure your payments arrive on time or even early, which some vendors even offer discounts for!

AR: If your business doesn’t accept credit card payments, you are lowering your cash inflow and revenue opportunities. For example, taking credit cards and accepting digital forms of payment such as e-transfer and wire/bank transfers will significantly improve your cash flow. Credit card transactions are electronically processed and are likely to be settled quickly and deposited in your business bank account by the processor within days. As a result, providing both your clients and prospective clients with more options other than writing and mailing cheques will likely make them happy, as well as you!

Bonus Cash Flow Tip: Credit Card Payments are no longer an option

The benefits of accepting credit card payments extend beyond just improved cash flow. Spire is available with credit card processing throughout partner Payfirma. Accepting credit card payments with Payfima will:

  • Increase sales opportunities: Credit cards offer the freedom to move businesses anywhere the customer goes. Owners are no longer confined to store hours or a brick-and-mortar location. You can accept payments anywhere, anytime with a mobile card reader and/or online.
  • Improve productivity: Processing cash and cheques not only require more money but also takes more time. Time wasted with trips to the bank, managing accounts receivables and chasing cheques. When you accept credit cards, the process is automated.
  • Secures your responsibility as the merchant: Payfirma allows you to ensure that you are PCI DSS-compliant. Vaulting credit card information tokenizing and encrypting transactions, Payfirma makes sure that your business is not in violation of your merchant agreement. This service ensures your responsibility to your clients is intact.

Use the right technology wisely. Thinking outside the box and adopting flexible payment solutions both for your AP and AR are concepts that will help you manage your cash flow. So when we apply these simple yet effective cash flow tips, we can see within 30 days the difference.  Giving us more insight into our systems beyond just the debits and credits.

Click on these links for more information about Spire and Payfirma.

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