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Streamline Your Small Business Cash Flow With These 5 Tips

#business accounting#cash flow management#tips for business owners

Written by prositesfinancialJun 25 • 3 minute read

Regardless of the size of your business or the state of your cash flow situation and strategy, there are certain things that apply across the board. If your cash flow strategy could use a boost, here are several ideas to help you operate more efficiently, bring you to profitability and keeping you there.

1. Go Digital

Digital money transfers like EFTs, ACH, eChecks, and other online options are increasing in popularity. Many businesses are still stuck using primitive technology like paper checks and cash. Paper checks require time and effort to print, sign, stuff, label, and mail. After mailing, they go through the postal system where they could be lost, damaged, or delayed. When they finally arrive, they sit in a stack of received mail, mixed in with junk mail, solicitations, ads and postcards before being sorted and opened. Later, they end up on the desk of the person responsible for processing them. They are opened, taken to the bank, deposited, and then finally cleared after days of waiting.

This complexity and vulnerability affects every transaction for both Accounts Payable and Accounts Receivable. It is easy to see the benefits of instant digital transfers. Online payments can be reflected in your balance immediately. Digital invoices get to customers immediately. Customers can pay online, with the tap of a button and the payment hits your account that instant.

2. Consolidate Software

Once all your payments are digital, the next big obstacle is the way you keep track of all these payments and accounts. You will probably want to use a digital accounting solution like Xero, QuickBooks, NetSuite or others. These solutions can provide tremendous time and cost savings by integrating all business features under one umbrella system. They can generate checks, invoices, and tax forms. They can often even file taxes for you, make payments, and document transactions in your books automatically.

You might be tempted to add other solutions like Expensify, Tallie,, or Hubdoc. If you use more than one piece of software or service for your accounting and financial management needs, you may run into the problem where transactions made in one system are not reflected in the others. This makes it complicated and difficult to track cash flow accurately.

The solution is to integrate so that transactions generated in one system are automatically updated in the others. Many of these solutions support integrations with one another, but it is up to you to set them up, so they can work for you. Once complete, it eliminates the need for repetitive and tedious data entry, and no one likes data entry!

3. Monitor Cash Flow in Real-Time

Monitoring your cash flow by hand or by using paper tools is like forgetting to change your clocks for daylight savings time. You’ll be an hour off for everything. Only in this case, you’ll be a whole lot more than an hour off! Checks and paper invoices take days to arrive and be processed.

Go through your cash flow system and eliminate the bottlenecks that create lag time in between stages. Make sure digital payments and process have been installed and integrate those systems with the digital accounting systems as mentioned above. This step is about combining all the prior things into one cohesive strategy of real-time finance. You want to get to the point where the value in your bank account is the same as what is reflected in your accounting software, but without you having to do anything to update that information manually. You don’t want to be waiting on monthly reports or manually updated spreadsheets if you can avoid it.

4. Create Cash Flow Stability

Automation and repetition are your friends here. You will want to automate your outgoing payments and set up recurring automated payments from clients and customers. You can combine this approach with automated invoicing that automatically sends clients digital invoices each month, based on the numbers from your accounting software. Then they can set up automatic payments on those invoices. Both you and your clients probably already use automated payments for all sorts of things at home, from music and movie subscriptions to online retail memberships and product subscriptions. You may be surprised how open your clients will be to these solutions.

5. Set Up for Easy Online Access

If you have multiple people in your organization who need access to cash flow data regularly, make sure to set up your accounting software and management tracking system to allow access by any relevant party from anywhere in the world. This is incredibly easy today because there are so many cloud-based services available to choose from. Use apps and services to allow access from smartphones and tablets so that key individuals can have access to the cash flow stats they need to make informed decisions anywhere, anytime.

If you combine these tips and incorporate them into a unified strategy for cash management, your business will be set up to operate more efficiently. Using today’s best cash flow management methods and technologies lets you meet challenges with agility and confidence.   

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