Using Online Accounting Software for Effective Cash Flow Management

 At the practical level, managing your small business means successfully managing its cash flow. You can achieve it by using accounting software to keep an eye on your accounts payable and accounts receivable.

As per the statistics, 30%-35% of businesses fail because they ran out of money. Implementing online accounting software for small business helps you in maintaining liquidity in your business. 

7 Tips on How to Manage Cash Flow with Accounting Software

Here are some tips for the effective management of business' cash flow.

1#

Forecast Your Income and Expenses

You can use online accounting software to predict or forecast your cash flow. It helps in eliminating unproductive expenses and avoid any shortfalls. In fact, these tools can track your expenses to reveal trends in your business expenses. It certainly helps to plan for the essential ones fixed and variable expenses.

2#

Chase Overdue Payments

In order to have a healthy cash flow for your business, you need to raise invoices promptly. You can chase the overdue payments easily with online accounting software.

Online accounting software allows you to prepare customized invoices and email them instantly. Then, you have to keep an eye on the overdue bills and send reminders to your defaulting customers. It is a good practice to include your payment terms in the invoices. 

3#

Efficient Inventory Management

Maintaining inventory means investing money in it. You can influence your cash flow by optimizing your inventory. Reconcile it regularly using accounting software having an inventory module to know the available stock items and that need reordering. Doing so will help you in optimizing your expenditure on inventory.

4#

Tighten Up on Outgoings

Use online accounting software for small business to assess the frequency with which you pay suppliers, tax bills, utilities, etc. Is it possible to pay in instalments or make terms more flexible? You may be able to negotiate deals that are more favourable to your business.

Also, watch the little expenses that over time can add up. You might be surprised how watching pennies helps the dollars shore up.

5#

Maintain Good Relationship with Your Creditors

You, as a business owner, have to cope up with up and downs. Your creditors can help you survive situations like Covid 19 by extending an overdraft or credit. They will support you only if they trust you.

Having a trusting relationship with your creditors also helps at times when your business is going strong, and you need money to cover your overheads. Yes, you may have to pay interest on it.

However, a short-term loan or a line of credit may help you win the situation. It will give you breathing space till your client pays their dues which can use to pay the debt. 

6#

Keep Your Expenses in Check

Your business' financial data is a gold mine. Go through it to find the trend in your business expenses; how often you pay your suppliers, taxes, and pay bills for utilities - brainstorm which of these you could pay in instalments.

You could also contact your suppliers and vendors and see if they will agree to flexible payment terms. Check the extent of your small expenses. Well, over a period of time, they can add up to a big total. 

See if you could eliminate that are extraneous to your achieving business goals. Accounts payable software can help you save pennies so that you end up with dollars in your pocket.

7#

Anticipate Cash Flow Problems

You have to keep your eyes and ears open to the market trends. You also need to update your cash flow forecast regularly and know which of your suppliers or vendors are getting in trouble. And you have to evaluate if any this is going affect your position. 

You could also use online financial reporting software to prepare cash flow and ageing accounts payable and receivable report to gain control of your business' financial situation. 

As a small business owner, you cannot afford to lose track of your business' cash flow. Because making a comeback may prove to be a very difficult task in the current Covid disruption.

Well, accounting payable software cannot prevent cash flow problems for you if you are not watchful. However, it can give you useful insights for making prompt business decisions and nip the potential cash flow problems in the bud.

However, implementing the right online accounting software for a small business like One Accounting Software can enable you to organize expenses, bill clients and watch your bottom line carefully.