Tips for improving cash flow with small business accounting software
Cash flow is a vital component of a successful business. Money should be constantly coming in and going out of the company. Keeping track of all income and expenses with small business accounting software will provide small business owners with an understanding of their company’s financial situation. A firm knowledge of a company’s cash flow will also help to alert the owner to any upcoming cash flow problems.
A continuous flow of income is necessary to offset expenses, and it is wise to encourage customers to pay their accounts timeously. Money that is owed to you by your customers cannot be used until it has physically been received. If your accounts receivable processing doesn’t run smoothly, you may be losing out on overdue income that could be put to good use. Small business accounting software can help business owners to improve their accounts receivable processing, which will in turn provide them with more money that can be used immediately.
Most businesses will, at one time or another, experience a period in which their sales are not up to their usual heights. This is usually nothing to panic about because many businesses come out of these periods unscathed. It is, however, advisable to implement stricter accounts receivable processing in order to give your business an extra financial boost to help it to survive an economic downturn.
The following 4 tips illustrate a variety of ways in which small business accounting software can help business owners to keep track of their customers’ outstanding payments, and to persuade them to pay their accounts on time.
1. Send statements
Customers have a tendency to put off making payments until the very last minute. Issuing statements to your customers will remind them that they have outstanding amounts that need to be paid.
Moreover, issuing statements does not need to be labour intensive because small business accounting software can be programmed to print or email statements automatically at a particular time of the month.
2. Shorten the payment cycle
When business is booming, companies often offer their customers an extended payment cycle. This cycle can sometimes be as long as 6 months. Reducing the payment cycle, even by a month, will improve cash flow significantly, providing business owners with additional cash sooner than with a longer cycle.
3. Charge interest on late payments
If your customers have a propensity for paying their accounts after the due date, consider charging interest as a penalty. You are losing money every day that your customers do not pay their accounts. This money could either be used to pay your own accounts, or it could be earning interest in your bank account.
4. Offer incentives for prompt payments
If you prefer to take a softer approach to outstanding accounts, why not offer an incentive to encourage your customers to pay on time? Offering a discount for timely payments is an excellent way to improve cash flow. You may receive slightly less income than before, but you are assured of receiving payments more regularly than before.
Choose QuickBooks’ small business accounting software to help improve your cash flow
QuickBooks offers a wide selection of accounting software systems that can help small business owners to run their cash flow efficiently. Take a look at our range of accounting systems and choose one that will best suit your business’s needs.
QuickBooks SimpleStart - for new and home based business
The simplest way to manage and track money going in and out of your business.
QuickBooks Pro - manage your business accounts simply and easily
Manage your business accounts simply and easily.
QuickBooks Premier - fast and easy advanced accounting
Fast and easy advanced accounting.
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