If you are running a small business, you may be searching for ways to improve your accounting department. You may decide to reconcile bank accounts frequently, look for opportunities to cut costs, and find software to streamline reporting. However, you may fail to realize why such activities are essential.
It comes down to proper cash flow management. Your finance and accounting staff is focused on managing the finances of your company to make sure it can get customers, run everyday operations, pay your employees, make necessary expenditures, meet financial obligations, and reinvest in your company. A Southwest Florida accountant makes sure cash is always available to keep your business going.
Because of this, you must frame any accounting improvements based on their positive impacts on your cash flow. Keep reading to learn how to audit some common accounting and bookkeeping activities to improve cash flow:
Pricing
Often, pricing is framed in terms of profitability; however, it’s also a vital tool to manage cash flow. Payment prices and terms maintain cash inflows after you sell products or provide services. Use this pricing strategy to improve your cash flow management. Adjusting your payment terms and giving variable pricing encourages your customers to pay for your products or services more quickly, increasing cash flow.
Bank Reconciliations
Frequent bank reconciliations deter fraudulent activity, ensure the quick discovery of bookkeeping errors, and help with cash flow management. If you are aware of the amount of money your company accounts have and the amount in transit, you can have a clearer picture of its cash position. Thus, you can determine if you have the money necessary to cover ongoing business expenses and make huge purchases and time investments.
Customer Invoices
To get paid, you must bill your customers. Sending timely invoices is essential in getting faster payments. It all hinges on when you send an invoice. By having robust accounting software in place, your accountant can send invoices right away by automating this process once a customer buys your produce or hires your services on-site. Batching invoices should be a thing of the past.
Vendor Invoices
To keep your business running, you must pay your vendors, partners, and suppliers for their contributions. However, this doesn’t have to mean you must pay these parties on their terms. Depending on your relationship with a vendor, you can try to ask them if they could budge on their terms. By negotiating payment terms, you can hold onto your money for a long time. However, ensure the revised agreements do not have unfavorable provisions or clauses that could pose future issues.
