7 Cash Flow Tips Every Business Owner Needs

 

Every business knows that cash is king, yet an alarming number of businesses (only 33%) don’t even use a tech platform, tool or app to manage their cash flow1. Here are practical tips that every business owner should use to help with their cash flow.

For those that do use a tech platform, tool or app, it is probably a manual process done in Microsoft Excel which is a great tool but takes a considerable amount of work to get an effective cash flow forecast. Furthermore, 74% of businesses judge cash flow tasks as difficult according to a 2019 study2.

This is precisely what we made myaccountsconsultant. We designed it to be simple to connect to your QuickBooks Online or QuickBooks Desktop and within minutes, get a 6-month future forecast that as a business owner, you instantly see KPIs and future forecast that you simply don’t get in QuickBooks.

As a former small business owner, having mature and simple tools to unlock insights on my cash flow is exactly what is needed to run and operate my business successfully.

Here important cash flow tips that you should consider when running your business and of course, myaccountsconsultant will make it dramatically easier to manage and forecast your cash flow management.

1. Ensure your days cash on hand is 45 days or better

Most business owners look at their current cash balance (cash on hand) in their check book and make quick decisions whether they can afford something or not. The reality is that there may be expenses coming in that will claim the cash balance at some point in the future, so you must know what the days cash on hand really are. myaccountsconsultant has 2 great dashboard KPIs that you can keep your eye on:

2. Understand what your payment terms are

You might have some great contracts with your customers and yet many larger customers have longer payment terms (Net 120, Net 60, etc).

There was a time when I landed a large contact with a large company that required me to ramp up people and resources. I was super excited, and we were making strong progress on the new contact. As things ramped up, so did the expenses and the fact that I had to pay the people that were doing the work. The problem however, was the large company had a Net 60 which meant the first check would not come in for 2 months and yet I had to pay the expenses and payroll out of my own pocket which put me in a significant cash crunch. Consider negotiating the payment terms up front to ensure adequate cash flow.

3. Keep an eye on your expenses

If you are not careful, expenses add up quickly. Some new expenses seem harmless to add to your overall bills like a license to Zoom or new software as an example. Furthermore, most expenses these days are put on a company charge card with an annual billing that is done initially and not remembered until the following year. And the larger your company gets, the more expenses come in with possible duplication – maybe one employee thought it was great to use Zoom, while another got a license for another conferencing tool.