Top 10 Cash Flow Tips

Small businesses can live and die by the success of their cash flow. Many do not realize the significance, nor do they plan for managing cash flow. Getting a good handle on cash flow will protect businesses from unexpected expenses and make the day-to-day less stressful. 

The term cash flow refers to how money moves through your business, taking account the money that is coming in and going out. It also deals with the timing of money movement, meaning it's imperative that businesses coordinate the movement so at any one time, the finances are safe. Use these top ten tips from Tally Services bookkeepers and accountants to manage your cash flow:

1. Good reporting is critical for management
   Having a great accounting system will give you confidence that the numbers you have are solid and a good foundation for management decisions.
2. Know your banker – deepen relationship
   Having a great relationship with your banker will ensure that they will understand your vision and your goals which increases your chances for support when you need it.
3. AR Management
   Verifying that the terms of your accounts receivable (money coming in) are terms that allow for cash flow to be where you need it to be in your business.  Is the turnaround working well?  Are you billing quickly?  
4. Vendor Discounts
   Do your suppliers offer discounts for paying early?  Are you maximizing those discounts? Good reporting will help you manage this additional cash flow opportunity.
5. Inventory controls
   Your accounting system should give you information on your inventory system. Review these reports to tighten up management of your inventory. Ask yourself questions like: Are you holding too much inventory for too long? What process can you improve?
6. Industry Standards 
   Check in with other industry standards. Contact Anne Macdonald, Business Librarian, with the Poudre Library who can help. Are your ratios of revenue and expenses in line with your industry? How do you want to stand out?
7. Pay periods – utilize an accrual of payroll before pay date
   Utilizing an accrued week or several days between pay period ending and pay date can be a cash flow life saver for a business.
8. Verify your terms with suppliers and customers
   Question your terms for your suppliers and customers. Even for new businesses, you can make the rules. Make terms that work for your success.
9. Determine your break even or burn rate
   Find out what your financial goals are even on a weekly basis. Understanding what you need on a monthly or weekly basis can help you manage your business each day, knowing your benchmarks.
10. Solid Team
    Have competent, trusted people involved that can help you or manage the financial reporting for you. Accepting nothing less than a team you feel supports your goals and has your back can make all the difference. (Of course, Tally Services would love to support you!)

Tally Services, in Fort Collins, can help your business understand and manage cash flow. We provide a wide array of bookkeeping and accounting services to large and small businesses alike to streamline and protect cash flow, allowing business owners to focus on what really matters, running their business. Contact us today to learn more about how we will work collaboratively with you to create unique solutions and systems that work for each unique business.