Home Business 6 Ways Small Businesses Can Manage Their Cash Flow More Effectively

6 Ways Small Businesses Can Manage Their Cash Flow More Effectively

There are no two ways about it. Careful cash flow administration is a necessary evil for small business owners, many of whom would much rather be spending their time using their creative talents.

You know that you need to track your business’s money effectively if you’re going to stay afloat and avoid a run-in with the tax authorities, but it can be frustrating spending so many hours every day immersed in spreadsheets.

A report issued by Starling Bank found micro-businesses spend 19% of their time on financial administration. This is time that could be spent building products or generating sales. It’s dead weight, but there are ways to improve the situation.

Technology has improved drastically in the last few years, and there are several apps that make things easier to manage without breaking the bank.

1. Use customer records as ground zero

The default communication method for small business owners can be emails, but this leads to problems down the line when trying to create a customer profile. The onus is on you as the owner to keep tabs on whether or not they’ve paid and getting it wrong either way is bad news. Asking a customer who has already paid can damage the relationship, and forgetting to ask for the money hits your bottom line.

One way around this is using the accounts receivable functionality of the vcita business management platform. It has dashboards that let you easily see your communication history with a customer and the status of all their payments. It integrates easily with many payment processors and reduces your headache.

The customer hub also allows you to better spot opportunities when you want to sell more products to existing customers. You’ve got a log of all interactions and transactions, and it’s all linked to the services provided and appointments kept, so finding upsell opportunities is a breeze.

2. Protect yourself with approvals

One of the hardest things for small business owners is trusting new hires. The company is your baby, and it can be hard to delegate. This is especially true when it comes to giving employees access to company money for expenses. You don’t want an employee to cross a line and you do not realise until too late.

Business travel expense fraud alone is estimated to cost US employers $1.9 billion per year. It’s understandable that small business owners might be apprehensive.

Research by ChromeRiver has found that the majority of fraud comes from manual submission processes and that only 24% takes place in situations where employees use expense management tools. This kind of feature is common in many accounts payable software tools, many of which support expense pre-approval workflows.

3. Log expenses with quick scans

Even in businesses with only one person, there can be a lot of receipts to keep track of. While many receipts are thankfully digital only, a small business owner can’t rely on every supplier sending them electronic receipts. Keeping all the physical receipts in a box, meanwhile, is a mistake waiting to happen should a glass of water accidentally spill – or should a bookkeeper ever seek to make order.

Many DIY solutions involve lots of manual work of taking photos, cropping and organizing. This is where a tool like Expensify can help. It has one-click expense receipt scanning and automatically uploads records to the cloud, even using optical character recognition to turn scanned images into financial data.

This takes away much of the risk from lost receipts and being unable to properly account for payments made. The few seconds you save by doing this in one click can save hours and hours over the course of the year. It’s a simple solution with a big pay off.

4. Make it easy for customers to pay

Small businesses can sometimes take an amateur approach to invoicing and payment collection, which negatively affects the brand. When your invoice looks hastily put together, or if it doesn’t allow your clients to pay using the methods and devices they’re used to, it adds friction and can leave people with a bad taste.

It’s far better to create professional invoices to remove any lingering doubt in the minds of your customers. With the technology available, now this is easy to do in a few clicks. It also helps you get paid more efficiently and avoid the embarrassment of sending an invoice with incorrect figures.

The aforementioned vcita, for example, allows you to create payable, branded invoices with just a few clicks or taps, and these invoices are all pre-integrated with your customer records and appointment bookings. The system can be configured to send personalized friendly reminders to those who aren’t quick to pay, and you can even send people contactless payment links via SMS when performing services in person, as a mobile wallet payment type of experience for customers.

5. Automate detection of duplicate entries

Another time-consuming cash flow management problem is when you think you’ve done everything right but the numbers just don’t add up.

After pulling your hair out for a while, eventually you might realize you put the same receipt through the system twice and it messed up the totals. Even worse, it might put your cash flow in danger while you attempt to recoup the money.

This is an easy mistake to make, but it can cost small business owners vital time you could be using elsewhere. There are now smarter expense systems that automatically detect duplicate receipts and reject them to avoid an owner needing to search for the offending record themselves. XBert is a great example of an app that sends you alerts when it thinks you have double paid.

6. Manage travel in one place

If you’re lucky enough to travel regularly for your business, it can be a nightmare to keep track of all the receipts through different providers. One misplaced receipt could be worth thousands, and it creates unneeded work.

In a world where there is more remote work, we may find travel expenses being an even more relevant issue for when employees do come to the office, especially if based abroad. Business travel dropped by a massive 61% in 2020 but, some experts are adamant that it will bounce back stronger than expected.

Zoho Expense is purpose-built for this reason. It’s able to read in 14 different languages and create records for them in the system. You can even forward emails from your inbox to Zoho, and it creates a record automatically.

Conclusion

There are many fantastic technology solutions to common cashflow administration problems for small business owners. Here you’ve seen some of the best ways to reduce the pain of managing money and free up more time for the tasks that grow the business.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

WORDPRESS