8 Cash Flow Management Strategies for Small Business

For every small business firm who is at the initial stage should keep one thing in mind, “ Never take your eyes off the Cash flow, because it’s the blood of business”. All the entrepreneurs are aware of the fact that Cash is King..!!!  Without proper cash flow management, a company cannot accomplish their business goals, they should look after their finance and accounting services very precisely for future analysis. A firm should have planned strategies before starting the business. The capital amount is the only cash they’ll be having at the inception of the firm, and appropriate small business accounting will help them out to avoid shortfalls.

Cash Flow Management

How to maintain accounts payables, accounts receivable and increase the profit rapidly, is all in the hand of the Owner. Proper management of assets and liabilities must be the main concern of the small accounting firm. While running the business, cash flow should be frequently verified and observed just to save you from a shortage of cash, which will lead to increasing liabilities of the business.

Following are the important factors that an entrepreneur should keep in mind:

  1. A Regular analysis of Cash Flow Management– Every business firm, not only the startup companies but also the successful companies must keep a regular check out on cash flow management, just to avoid upcoming shortfalls, which will affect the flow of cash and can lead the firm to excessive liability.
  2. Diminish Costs– Plan appropriate strategies to reduce your unusual costs that include insurance that is no longer in use or utilities, rent, etc. In this way, you can try to cut down your expenses and focus more on productivity to earn more profit.
  3. Recover Receivables– Try to push your customers to pay you periodically. Keep your credit limit up to Net 30 and Net 60 terms in contracts to a minimum extent, so that your account receivable will be vacant and you can run your business risk-free. Give some benefit to the customers by keeping offers, discounts, etc in order to receive timely payments from them.
  4. Setback payables– When it comes to payments of vendors or suppliers try to look for a maximum limit of net60 to net 90 terms so that you can get enough time to pay your liabilities to the maximum extent. You should always try to clear your account payable by selling your assets that are not in use anymore or find out other ways.
  5. Use Updated Technologies– To simplify the workload, in this modern world use updated technologies and methods that will help you to evaluate the cash flow work within a fraction of the time, instead of following long procedures that are time-consuming. Some updated software that is commonly used documents cloud, automated clearing house, lockbox, quick deposit and much more.
  6. Initiate creative ideas for sales– To run the business with proper coordination, it is necessary for every firm to come up with innovative ideas and rewards for the employees by keeping some incentives, tours, etc. This will motivate the team and initiate them to achieve their targets. In short, this initiative can lead you to maintain your cash flow, as it will help you to decrease your liabilities.
  7. Focus on cash flow rather than Profit– When you are in the initial stage of your business and have a small accounting business, try to focus on cash flow system instead of profits. This may sound awkward, but reducing the liabilities as early as possible will be extremely beneficial for your firm.
  8. Nominate a Cash flow monitor– Assign the task of monitoring cash flow to a trustworthy employee, who can inform you, when you are going to reach your threshold- suppose your cash flow is going to hit $1,000.

So, the above content gives you a clear idea of how cash flow management is an essential factor for every business firm, whether it is small scale or large scale, this is a continuous process.

Feel Free to call up @ +1 646 688 2821 for more information. You also can reach us by emailing at info@cogneesol.com.

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medical accounts payable and receivable

Why Medical Companies Need to Automate Accounts Payable and Receivable functions?

In every business, organization accounts payable and accounts receivable play an important role. The healthcare organizations are not an exception in this regard. In a healthcare firm, the main functions are obviously related to patient care. So there is always a chance of healthcare accounts receivable and healthcare accounts payable functions getting ignored. Not giving proper importance to these functions can nullify the efforts put in by the team towards offering patient care services.

In such a scenario, automating the medical accounts receivable and payable functions by using the latest technology is the best option.

The various benefits of accounts receivable automation have been discussed below:

  • Reduced outstanding payments- By using the automation option, the invoices would be prepared and delivered to clients at the right time, thus leading to quicker payments.
  • Opportunity to offer e-invoicing- Many clients ask for e-invoicing facility which can be easily offered by latest software like QuickBooks. This can help in offering better service to clients and hence enhancing the customer base.
  • Opportunity to employ staff on core functions- By automating the accounts receivable process, the medical firms with a lesser number of staff members can focus more on the core functions of the organization, thus leading to enhanced productivity and efficiency.
  • Lesser customer inquiries- As automating will ensure that invoices will reach the clients on time, your customer care employees will have to answer a lesser number of customer inquiries.
  • Improved cash flow- With better management of accounts receivable, the medical firms will have better cash flow, leading to greater operational efficiency.

The various benefits of accounts payable automation have been discussed below:

  • Helpful in keeping records of payments made or missed- There is always a chance of certain payments being missed or being made twice by mistake. But with the option of paper invoicing through automation, these mistakes can be avoided.
  • Aids in availing discounts- Early payments help in availing the discounts offered by the suppliers. Automation can play an important role in this process.
  • Useful in maintaining a good relationship with suppliers- By making payments at the right time, good relations with the suppliers can be maintained which is useful for the long-term success of the business.

Cogneesol has emerged as a top-class provider of outsourced accounts receivable and accounts payable services to business organizations from all over the world at affordable costs. These services can help the business firms in maximizing their potential and reducing overheads. By hiring these services, focus competencies can be prioritized and make your venture more successful. To get more information, contact us at info@cogneesol.com or call us at +1 646 688 2821.

Understanding the difference between Accounts Payable and Accounts Receivable

Before going into the difference between Accounts Payable (AP) and Accounts Receivable (AR) it will be relevant to look at what these accounting heads actually reflect.

Accounts Payable and Accounts Receivable

  • Accounts Payable – It is actually the amount that a company has to pay its vendors and suppliers for goods and services received. It is therefore treated as a liability in the books of accounts. Once payment is made, the liability is converted to expenses. Since the goods have been taken on credit for a certain period a track has to be kept off the contracted due date of payment. Large companies have thousands of such payable items and this is one reason why they prefer to outsource Accounts Payable Services. Missing a payment deadline for oversight or poor monitoring can tarnish the market reputation of the company.

  • Accounts Receivable – As the name suggests, it amounts to be received by the company against goods and services are given on credit and is therefore treated as an asset in the books of accounts. After a payment is received it is treated as an income. The company has to closely monitor the inflow of funds as payment defaults will put a stress on the cash flow and working capital requirements. This is also why firms prefer to outsource Accounts Receivable Services to specialist agencies that have the capability to recover even stubborn and long outstanding debts.

How do accounts payable and accounts receivable have a direct bearing on the health of a company?

AR is broken up by the average number of days to collect payment and DSO (Daily Sales Outstanding) is a ratio of AR to Average Sales per day.

AP is analyzed by the average time to make payment for an invoice and DPO (Daily Payment Outstanding) is a ratio of AP to the daily average of purchases or cost of goods sold per day.

The uninterrupted inflow of working capital can, therefore, be guaranteed by lowering DSO or hiking DPO. This is possible by outsourcing Accounts Payable Services and Accounts Receivable Services to firms that can maximize receipts and payments and keep DSO at a healthy 45 days.

What do these services have to offer-

  • Accounts Payable Services – The components of these services consist primarily of data capture that includes document storage and indexing and audit and reconciliation of invoices, electronic invoice and data processing, and incorporating mechanisms that eliminate the possibility of duplicate payments. Finally, payments are monitored to ensure accuracy and to minimize floating costs of customers.

  • Accounts Receivable Services – By outsourcing this aspect a company stands to benefit in a number of ways. First, there is a steady recovery of receivables and cash flow and reduction of any stubborn or sticky debts. Highly experienced recovery teams help to recoup even old debts. Clients get consolidated reports and are therefore constantly in the loop on the financial position of the firm. Finally, the state of the level of receivables collected and outstanding can be accessed anytime from a common browser.

Hence, these are key factors in optimizing a stable financial position of a company and are therefore best outsourced.