Financial Management Tips to Keep the Cash Flowing

There are so many intriguing layers to running a business. Though you may have the best products and services in your industry, they all mean nothing if you can’t properly manage your cash flow. You need cash to adequately market your products and services, hire and pay staff, manufacture and produce results, and provide customer service. If your cash is always tied up in one aspect of business or another, your business stands to become stagnant. To avoid this common pitfall, here are some tips on effectively managing your cash flow:

  1. Better Record Keeping

One of the most basic yet important concepts to managing cash flow is diligent record keeping. When the subject matter is your company’s finances, there is really no such thing as being too observant of your money. It is important to implement a process for keeping a record of all financial matters within the business including your banking statements, receipts, invoices, expense reports, and payroll. If you can’t afford to hire an accountant, there are plenty of affordable accounting software packages you can invest in to help make recording finances a lot easier. When you have a clear understanding of where your money is you’re better prepared to make financial decisions for the future.

  1. Improve Receivables

If you’re in the business of extending credit to your customers, then your receivables are where a lot of your cash is tied up. It is important that you have clear guidelines and contracts between your customers so they pay in a timely manner. Popular methods for getting customers to pay on time include offering incentives like discounts for paying prior to the 30- or 60-day timeframe. Other ways to improve your receivables would be to offer several methods of payment so that customers can opt to electronically pay you for your products or services. You also want to make sure that you have a follow-up process in place for customers who are nearing their due date to try and get the funds collected.

For problematic customers or outstanding invoices, some small business owners opt to consider factoring accounts receivables. Factoring companies will purchase the outstanding invoices from qualifying companies and give cash up front. This way you can use the money without having to wait for the customer to pay you.

  1. Efficient Filing

Another part of maintaining financial records is having a systematic filing system in place. Whether you’re currently operating with digital forms or you still prefer to use paper, there needs to be a system in place that will keep all financial documents in order. Cloud file management systems are trending for businesses that utilize digital forms. Documents can easily be scanned and uploaded to the server for safe keeping. When the forms are needed, they can be easily accessed by specific staff members who have permission. This keeps things from getting out of hand or overlooked as tons of paperwork often can.

  1. Consider Different Payment Terms

If you’re really having a hard time collecting from your customers it might prove beneficial to consider different payment terms going forward. By requesting for example, that customers give you a 50 percent deposit upfront, you’re lessening the amount of cash you have outstanding. If you’re going to make changes to payment terms, it is important to do so in a manner that does not upset current customers. Incorporating it into new contracts, for instance, is ideal so that there is no confusion going forward.

  1. Maximize Payables

Your customer’s aren’t the only ones who have to foot a bill; you also need to make sure that you’re paying your vendors on time. If you can slow down the process of repaying your vendors, then you can effectively manage your cash flow a bit better. This might include asking for extended repayment options so that you have 60 to 90 days to pay them. If you like this option, be sure that you don’t overdo it by forgetting to pay your vendors on time as this could create more financial issues for you with late fees and a ruined business relationship.

Effective money management is the key to operating a business. Without the cash for operating costs, the business will slowly but surely dissipate. If you’ve been having cash flow issues, try incorporating some of these ideas into the mix. Over time, you should start to see some cash free up that can be put to use elsewhere such as in developing new products and services or expanding your business in the next few years.

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Start-up Story: SqueezeIT – My Fight Back

Read part 1 and part 2.

I then checked out Thebeesknees in California to make sure they were legit, they even phoned me and answered any questions I had for them so that put my mind at ease and I could buy the software in a white label (see Wikipedia) version which meant I would own it outright.

Researching Irish market

So next I decided to research the Irish market again in more detail and be the master of my own destiny – and hopefully business – to see if anyone was specialising in this type of service and found that although there was plenty of web design companies offering mobile site services none were specialising in adapting websites for mobiles so I decided to keep going. I was actually beginning to enjoy my little adventure!!

I even contacted some of them to see if they would be interested in working with me and needless to say I was underwhelmed by the avalanche of responses I received.

I joined meetup and went to various meetings and got mostly positive feedback on what I wanted to do during 2014 as further research and also to network but everyone was “too busy” or wanted to be paid from day 1 which was not possible. Discouraged? Moi? No way Jose!!

Name and resources

I decided on the name SqueezeIT for the company and registered the name with the Companies Registration Office (CRO).

Actually one company I contacted said that they could offer the same service as me but after four weeks I still haven’t heard from them, so go figure. I also researched pricing in the market and drafted a business plan.

One thing I was adamant about was to use my own resources to get everything started and not rely on others until I had something to “show” for my efforts as I also wanted to find a business partner to work with from a similar technical area as mine to achieve some credibility.

I then researched and decided on my target market – both offline and online – but that I will keep under wraps for now as it has been decided on at this stage but it did take some time. The devil is in the detail as they say.

To be continued…

Written by Aidan Murray. As part of ‘Use SBC as a channel’ initiative, SqueezeIT has an exclusive offer for SBC members: “We will waive the 100 euro deposit for the first five companies that sign up for our service with us and will give a 50% discount for the next five businesses.”

For more information on this business visit Partner Site: | Email: |Phone: 087 261 7576.

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