Achieving and maintaining a positive cash flow is often the bane of a small business owner’s existence. But properly projecting your business cash flow is essential to long-term growth and financial success.
Besides just helping you pay the bills and pay your employees, having cash on hand makes it possible for you to take advantage of opportunities when they arise.
Detailed projections are often laborious and challenging to set. While you may initially feel nervous about handing over the reins to someone outside your organisation, finding an expert and gaining a new perspective may be exactly what you need to get things on the right track and prepare for the future.
Here are three steps for working with your accounting team to improve your business cash flow:
Step 1: Understand where you are and where you’re going
Before you and your accountant discuss cash flow improvement, you should both have a clear idea of where your finances stand right now, as well as:
- What your goals are in the next 5-10 years
- What your key values are
- What your business does and why.
Your accountant will only be able to help you get where you want to go – and make proactive recommendations – if you both have a clear idea of where you’re headed.
Next, ask your accountant to help you understand your cash flow, analyse problems, look for areas to improve, and make plans to better manage it. Different plans work for different businesses and your forecasts won’t be perfect, but together, you can set up systems to measure your progress and focus on achieving your long-term goals.
Step 2: Find and use the right technology
When you’re running a business, keeping up with the latest financial software is one of the last things you have time to worry about. That’s why your accounting team should be a trusted resource in recommending the best in-house accounting software for your needs – especially one that helps you develop better systems and processes that will then lead to improved cash flow.
The right technology tools will allow youto always know your cash position, make more careful forecasts, have the capital you need to expand, and pay yourself and your team properly.
Step 3: Review, adjust, build & protect
With the right software and the help of your accountant, you will be able to keep a close eye on trends and data such as profit and loss reports, accounts payable and accounts receivable, assets, payroll, depreciation, etc. You’ll also be better able to share information with your accounting team, manage any debt and tighten up your invoicing processes as cash flow improves.
Having a clear financial picture will also help you move into a position where you can build a cash reserve while maintainingpositive cash flow. Having a secure amount of cash in reserve will not only give you peace of mind but will help protect your business in the event of an economic downturn, ensuring that you’re still able to reach your long-term goals in the future.
Need to find a trusted accounting partner to get your business to the next level? Contact the experts at Accru today.