Maintaining a positive cash flow is one of the most important facets to keeping your business afloat. Cash shortages are dangerous because they place financial burden and threaten your chance of meeting financial obligations.
Accounting software can help you organise and coordinate your cash flow activity, give you the tools to schedule invoices and provide you with updates to take action as payments become overdue. Below are four ways accounting software can help you manage cash flow.
Sales are great, but it's easy to get caught up in the sales excitement and forget about the collection process. It's important to bill your customers on a regular basis to ensure a fast turnaround on receivables and prompt payment.
How software can help: Most software today is capable of emailing out invoices as soon as goods have been dispatched, saving you the hassle of following up each sale.
Enforce payment discipline
Not every customer will abide your payment terms so it's vital that you have a good collection process in place to maintain the health of your cash flow. There are a number of different alternatives to following up cash flow, but the main thing is you stay on top of your accounts as they become overdue.
How software can help: Credit Control Manager is a feature of most accounting software today that can assist in debt collection. More sophisticated software will also come complete with automated emails notifying customers of overdue debt.
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Eliminate unnecessary expenses
Businesses accrue a lot of expenses that are deemed necessary for day to day activities, but often it's not easy to identify areas that can be improved. For example, you may be spending a large amount of money sending out paper invoices, when in reality it is more cost effective and convenient for customers if you email your invoice in PDF form.
How software can help: Accounting software will allow you to look at money that is being consistently spent and then pinpoint areas of your business that are contributing to unnecessary cash outflows.
Maintaining high levels of stock in your warehouse can actually be damaging for your business. Stock can be seen as a representation of cash and if it is left in the warehouse not being sold, it's likely you have over produced. Identify what your best-selling lines are and focus on selling off those that aren't as successful.
How software can help:Good accounting software will not only manage your finances but also report on stock levels, allowing you to determine how your inventory is affecting cash flow.