Cash lets you cover payment for your employees, rent, materials, and other operating expenses. It makes it possible for your business to run. Cash flow, on the other hand, refers to the money that moves in and out of your business. A positive cash flow means you have enough money to not only run your business smoothly, but make new investments and further grow your business.
Many startups usually fail within their first six months. Those that survive their first year, however, are more likely to encounter cash flow problems. This is especially common among small businesses that grow too fast and fail to pay attention to their finances. You can easily prevent this and improve your business cash flow by following the tips below:
1. Organise your books
Being a business owner or an influencer requires you to handle so many responsibilities all at once. When you’re busy, you may tend to ignore your books, which can lead to different issues, like inaccurate reports and forecasting, inconsistent invoicing figures, and general loss of financial control. When this happens, your bills may not get paid and you may fail to chase overdue invoices.
Having organised books helps you generate comprehensive reports that can help you understand your cash flow. They must always be kept updated and accurate, and our e-commerce accountants can help you ensure this. By working with us, you can rest assured knowing that your tax returns, financial statements, and business activity statements (BAS) will be prepared quickly and accurately.
We can also help train you on using an accounting software solution for a more efficient and convenient process. Some of our accounting software providers are Xero, Quickbooks Online, and MYOB, and we can advise you on which software to use that will meet your needs and requirements.
2. Have a cash flow forecast
Positive cash flow is important for the survival and growth of your business. To fight against a cash flow crisis and make better business decisions, formulate a cash flow forecast. It lets you see which months you can expect a surplus and when you can encounter a cash deficit. This way, you can determine when to make a capital expenditure or when you have to cut an expense.
To take advantage of these benefits, consider working with our e-commerce accounting firm. We offer cash flow forecasting to online business owners and influencers. This works by providing you with detailed yet easy-to-understand reports and implementing a cash flow maximization strategy that works best for you.
3. Make payments easy
Excessive late payments from clients can cause cash flow problems in the long run. Reduce this risk by writing contracts with clear payment due dates and making payment terms easy to understand.
You can also encourage your clients to pay on time by offering incentives, like discounts for those who always pay early or on time. For a more convenient payment, consider offering multiple payment methods.
Conclusion
From petty cash to business capital, pay attention to cash flow issues because it’s what makes your business alive. Aside from following the tips on this guide, ensure that your cash flows in the right places by working with skilled e-commerce accountants like us.
Scale your business by taking advantage of our accounting services. Our e-commerce accountants in Australia are passionate about helping you increase your profit. Contact us for a free strategy session!