Cash Flow Management Strategies From An Accountant

If you’re a small business owner, chances are you understand how frustrating finance management can be. It can feel like juggling a dozen blocks in your hands, waiting for them to tumble. As a seasoned accountant, I want to provide you with several cash flow management strategies you can implement today.

Small business cash flow management is essential because it prevents financial errors in small businesses. Small businesses are constantly balancing an influx and outflow of money through client transactions, loan payments, accounts receivable, and more. Without cash management, businesses risk detrimental losses that may cost the company. Take a look at these five cash flow strategies that will help grow your bank account and get payments to you faster.

1. Use business credit cards to your advantage.

Don’t be nervous about using credit cards within your business. There are several ways that using a credit card to make company payments will improve cash flow in your company. First, by making a separate account for your business expenses, you actively take steps to separate your business finances from your personal finances. This minor change will make filing taxes, managing employee expenses, and monitoring incoming charges a breeze.

Not only can credit card programs relieve fears about meeting payment deadlines, but you can also use their rewards programs. Many credit card companies offer rewards and cashback whenever you make purchases. Forbes even listed “The Best Business Credit Cards of September 2022”, highlighting several credit card companies that provide travel protections, airport lounge access, and car rental insurance. Credit cards aren’t something to fear; instead, think of it as a top money-making cash flow strategy!

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2. Negotiate payment terms with your vendors.

Payment amounts and deadlines don’t have to be set in stone with vendors if making a few changes will benefit you both. Occasionally meeting with your suppliers allows you to understand their needs as a business and adjust accordingly. Their business goals can be used as leverage to negotiate a more efficient contract and even arrange new payment terms that will improve both of your financial situations and improve your cash flow.

Of course, you want to enter a negotiation with the goal of both parties leaving satisfied. Therefore, it is vital to thoroughly research the current market of your vendors and get an accurate perspective of their wholesale costs. Most of all, you want to sell yourself as a valuable asset to your vendor. Do you plan to invest in marketing to put their product in front of hundreds or thousands of potential buyers? What can you provide to encourage vendors to be open to negotiations? Vendor agreements are a two-way street, so if you need to change your payment terms, it’s a good idea to make the changes palatable to the other party.

3. Invest in financial assistance.

One person managing all of the financial aspects of a small business is bound to miss an error or two. Financial advisors will help you make sound business decisions through financial expertise and guidance. Instead of relying on Google to answer your small business finance questions, your financial advisor will be there every step of the way. They will also have the expertise to reduce your costs and save you money. In addition, financial advisors are expertly trained to help clients avoid unnecessary taxes, create long-term savings goals, and plan for retirement.

If crunching numbers is where you need some extra help, hiring an accountant will relieve your anxiety. Accountants will create and maintain essential financial reports for your small business. They will also be able to locate your top strengths and weaknesses and understand how to use them to improve your financial position. Accountants are especially skilled at identifying which cash flow strategies are going to be the key to multiply your savings and revenue.

In addition, our own accountants at VFO attentively monitor our clients’ financials, so we can accurately forecast a company’s financial health and project how they will perform in the future. So, no matter which responsibilities you want to hand to a financial assistant, an online cash manager is an investment well worth it.

4. Use technology to make payments quicker and easier.

Taking advantage of modern financial technology can speed up your cash flow processes. Several programs make client and vendor communication painless, from contract distribution to receiving payments. Why manage paper documents if there are dozens of programs that will organize and protect your digital documents and reports? Make it easier on yourself by investing in easy-to-use business management software.

Several of these programs are safe and effective at keeping all your information in one place. For example, indy is a modern small business management tool that uses the same advanced encryption technology as banks to protect your sensitive information. In addition, it allows business owners to organize their invoices, contracts, payments, and files in one location. Mint is another program that makes budgeting and bill payments easier for the small business owner.

Time is money, and modern technology in your small business will make every process smoother. You’ll be able to keep track of each business expenditure and incoming payment with a few clicks, saving you time throughout your work day. Forget losing paperwork and scrolling through hundreds of online documents; what you need will always be at your fingertips.

5. Have a clear collection policy.

There will always be customers with late payments and a busy schedule. Establishing and enforcing a clear collection policy can minimize miscommunication and encourage faster payments on accounts receivable. Being in this business for several years, I understand that it might be intimidating to set clear boundaries. However, collection policies are set to protect both you and your client!

If you struggle with customers or clients that don’t make timely payments, it can harm your flow of money. Late payments can leave you in a tight financial position, where paying employees, paying off loans, and even making personal purchases are challenging. Don’t be discouraged from adding a late payment fee to your client contracts; it will protect you from financial distress and encourage clients to make payments on time.

Find out which strategies will heighten your small business cash flow today.

By implementing small changes in your business, you can significantly improve your flow of money and manage your finances freely. As an accountant, I constantly analyze my clients’ situations to see which cash flow management strategies we can use to boost their business’s success. If you take steps to utilize these same small business cash flow strategies, you’ll see results within no time.

Virtual Financial Officer strives to bring financial ease to small business owners. Reach us at support@vfo.co to discuss how we can implement fool-proof cash flow strategies into your business and exponentially improve your cash flow.