Cash flow is the lifeblood of a business, and managing cash flow effectively allows a business to grow and prosper. To meet their expenses now and in the long-term, small businesses must successfully manage cash flow. The goal of business operations, of course, is positive cash flow. (Check out this U.S. Chamber of Commerce resource: How to Manage Your Cash Flow as a Small Business.) Businesses look to collect more money than they spend in a given period. Organizations that run into problems with negative cash flow need to refocus attention on collecting revenue from customers and streamlining operational expenses. (My Business' Cash Flow Is Failing: What Do I Do?)

Managing Cash Flow Effectively

In order to scale a business to the next level, entrepreneurs need to manage cash flow effectively. This is where bookkeepers can help. Bookkeepers provide business-finance solutions and insights that small business owners might otherwise overlook. 

Bookkeepers Track Finances 

For example, bookkeepers help small businesses manage cash flow by keeping tabs on money coming in and going out. Bookkeepers monitor the cash flow on a regular basis, tracking incoming and outgoing payments and accurately categorizing them in the correct accounts. As a result, businesses can track their finances in real-time. Utilizing cloud bookkeeping platforms, businesses can access financial accounts from anywhere with an internet connection. That way, business owners know the exact amount of cash available. If cash is low, businesses can transfer funds from one account to another to make on-time payments. Thus, they take advantage of early-payment discounts and avoid late-payment charges and interest. 

Bookkeepers Help Collect Receivables

Another advantage of working with a bookkeeper is the ability to collect receivables. Bookkeepers can send invoices to clients as soon as products or services are delivered, to collect payments as soon as possible. Each invoice clearly states the payment terms. Additionally, bookkeepers can identify which clients aren’t paying their invoices on time. They can check if the client viewed the invoice and how often. If the client didn’t view the invoice, perhaps the invoice needs to be sent to a different email address. If a client viewed the invoice but failed to pay by the due date, then sending a reminder is appropriate. Bookkeepers streamline their invoicing practices with automated features that create and send recurring bills and follow-up reminders.

Bookkeepers Develop Financial Forecasts

Lastly, bookkeepers help small businesses manage cash flow by developing accurate financial forecasts, including a profit and loss projection. Businesses can maintain positive cash flow by estimating invoices, payroll expenses, and earnings. They give themselves more lead time by projecting finances three to six months out. Financial forecasting provides a better understanding of cash flow, so organizations can adjust their cash management practices. For example, they may decide to delay payments to vendors or change terms on customer invoices to speed up payments. 

Contact Us for Bookkeeping Services

For more cash flow tips, claim your Free Report: 105 Ways to Speed up Cash Flow. Also, contact us and tell us about your business. Prosperity Bookkeeping offers a full line of virtual bookkeeping services that allow business owners to spend less than one hour per month on bookkeeping-related tasks.