Proven Small Business Strategies for Keeping a Steady Cash Flow
If your company is going to grow and sustain success, you must understand how to maintain a consistent cash flow. A lack of cash flow is one of the most common reasons small businesses fail, and taking the time to learn and implement simple tactics for keeping sound finances can make all the difference.
Cash flow refers to the money coming in and going out of your company at any given time. If you’re not making all of your payments and investing back into your business, it’s time to revamp your strategy. Payroll Setup has provided some simple tips to help you do just that!
Get Paid Quickly
Many small businesses struggle with cash flow because their customers are paying late. Find ways to incentivize your customers to pay early (or at least on time), and you'll be amazed by how much more money you have available for bills and growth initiatives.
One way to accomplish this is to revisit your invoicing process. Be sure to establish clear payment terms, send invoices immediately after sales, and provide customers with various payment methods (including one-click options).
You can use a free invoice template online to design professional-looking invoices personalized with your logo, name, and brand colors. There are many pre-made templates to choose from, and you can customize them to meet your needs.
Wait Before You Pay
When it comes to your business paying bills, wait as long as you can before sending payments. Of course, you don't want to pay late, but setting up a direct debit for recurring expenses on the final due date will allow you to keep more cash available (and earning interest). Plus, you won't have to worry about forgetting to pay and accruing late fees.
Also, see if you can spread out your business expenses throughout the month. Some business owners schedule payments on the same one or two days every month because it's easy to remember. But this can kill your cash flow. When setting up automatic payments, try to avoid paying all your bills at once, and take advantage of monthly payment options to avoid paying a lump sum.
Keep Cash Available
Your cash will work harder when it sits in specific types of bank accounts. Locking your cash into a 30-day or 60-day CD bond will not help your cash management efforts. On the other hand, using an interest-bearing business account as your primary cash reservoir will earn you interest while ensuring you have immediate access to cash for unexpected expenses or forecasting miscalculations.
Invest in Accounting Software
Technology can help you better manage your cash flow and overall finances. Research various accounting tools to choose software that will help your company reach its goals. Many products are powerful yet easy to use. The right software will help you track all of your accounts, streamline tax filing, and generate invoices.
Approach Payroll the Right Way
Finally, it matters how you manage payroll. Without an effective system in place, it's nearly impossible to maintain a healthy cash flow. For example, you should wait to transfer funds from your interest-bearing account until it's time to pay salaries so that your cash will earn as much interest as possible. And if you want to save time and money on writing paper checks, establish direct deposit for your employees.
There are several payroll cycle structures to consider; you just want to find one that works best for your company and stick to it. Some businesses pay twice a month, meaning there are 24 pay cycles per year instead of 26. Other companies opt for a bi-weekly cycle, allowing for smaller paychecks each pay period. If you haven't set up payroll for your business or you need to rework your current system, look to quick and easy solutions like Payroll Setup!
Now is the time to get a handle on your cash flow management. Follow the tips above to get started on revamping your strategies and making more cash available for your business to pay bills and invest in growth. Your company will be in a healthier financial position in no time!
Would you like to read more helpful content or learn about our quick and easy payroll solutions? Visit PayrollSetup.com today!
Katie is a guest contributor to the PayrollSetup.com blog. Readers can follow her work on topics such as Health, Relationships, and Personal Finance here.
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