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Improve Cash Flow by Managing Transactions and Finances Better

March 8, 2021

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As we’ve covered in previous pieces in this series, understanding and managing cash flow is crucial to running a thriving business. Cash flow is the amount of money that is available after all operational costs are taken into account. The more cash flow you have available, the more you’re able to reinvest in your business – not to mention the peace of mind you have knowing you have something available “for a rainy day”.  

By having good accounting practices and keeping an eye on the in- and outflow of funds, you’re better poised to optimize cash flow and understand your business operations. 

In this article, we’ll cover ways you can improve your cash flow by managing your transactions and finances. 

Anticipate Needs 

We mentioned having good accounting practices, but what does that mean?  

Here are some tips for getting a handle on your accounts: 

  • Invest in accounting software – An accounting program doesn’t need to break the bank. There are many options and tools available for businesses of all sizes, and they are powerful means of business management. By tracking your accounts accurately and being able to easily run reports to get an overview, you’ll find your business is much more comprehensible. 
  • Evaluate your expenses – By having accounting software, you’ll get a clear picture of what your operating expenses look like. You may even find that you have a lot more cash going out than you thought. Recurring expenses include utilities, rent, payroll, inventory, and other monthly costs. 
  • Track sales – Tracking your sales gives you a clear picture of trends in products and purchases. This allows you to stock items accordingly, to avoid aging inventory. With time, you’ll be able to fine-tune your purchase practices (not to mention, your product set) and optimize your financial investment. 

Through these practices, a vivid picture of your business begins to take shape. You have a clearer understanding of what products are being sole, and can anticipate your expenses well in advance. Of course, there are certain events you can’t anticipate, so getting a grasp of what you can helps you prepare for the unexpected. 

Take the time to run monthly reports and really look at them, then formulate projections. Depending upon the nature of your business, you can then look at what holidays or events may be coming up that could impact your sales or bookings. And with time, you’ll see year-over-year trends that will really help you become even more accurate in your organizational workflow. 

Outsource and Delegate 

While it’s advised to consolidate functions and keep them in-house if you can, there are certain business processes that have a positive impact on cash flow by outsourcing them to outside experts. 

One business function that can be outsourced for a strong impact on cash flow is payment processing. In both brick-and-mortar and online storefronts, payment processing is the lifeblood of operations and customer relations. Having a payment processor with the highest levels of security in mind, means you are protected from fraudulent transactions, and you’re saved from the effort of reconciling false transactions.  

A reliable payment processor also protects customer data and keeps it safe when transactions are made, meaning your customers can feel safe in doing business with you, and to keep coming back.  

Another aspect of payment processing is settlement times – the amount of time it takes for the cash from a customer’s account to clear, and be made available in your merchant account. With DPO, settlement waiting times are a thing of the past. Real-time settlements allow you to access money from customers immediately, meaning you can reconcile accounts easily and always know where you stand. 

See our other articles in the cashflow series:

How to Improve Business Cashflow

How to Improve Cash Flow by Managing Staff, Assets & Inventory

Improve Cash Flow by Optimizing Marketing & Tapping into New Opportunities

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