As most business owners know, success depends on more than the number of products and services being sold. Any business, regardless of its size and industry, also needs to manage its cash flow wisely.
How do businesses do this? The key is taking advantage of all the money management tools and strategies available to them, says Steven Knopf, Senior Vice President of Treasury Management for Firstrust Bank.
Leverage accounting software
Though most businesses use accounting software, many don’t leverage this software’s full potential, according to Knopf. Whether it’s an industry specific accounting program or one of the popular small business products on the market today, businesses need to unlock the capabilities of this software.
“One of the first steps a business can take is integrating their accounting software with their commercial bank account,” Knopf says. “This eliminates the duplication of efforts, saves time, reduces errors and improves overall efficiency.”
Simplify accounts receivable
Several tools and strategies are also available to help speed up and simplify the payment of accounts receivable. “For businesses that receive checks in the mail, remote deposit capture and lockbox services are two popular tools we offer to streamline deposit processing,” Knopf says.
- Remote deposit capture involves connecting a check scanner to a computer in order to transfer checks digitally to the bank. Businesses save time and gain efficiency because they no longer have to travel to and from the bank.
- Lockbox services are even more efficient. Customer payments are sent directly to a bank post office box. The bank inputs the data and deposits the funds and can capture an image of each document and make it available to the business via an online portal. Plus, payment information can be uploaded directly into the company’s accounting system to close out open receivables, saving time and money.
Be strategic about managing expenses
Along with managing the money that comes in, it’s also important to manage what’s going out. Here are some tips for managing business expenses:
- Select the right business credit card. Look for credit cards that have robust reporting abilities. They should not only break down expenses by category, but also by user. This is an important benefit for companies with multiple users on one credit card account. Look for cards that can save money through rebates, rewards and discounts.
- Work with vendors to negotiate favorable terms. Along with negotiating the best price with vendors, try to set up payment terms that may work to your advantage, for example, grace periods to avoid late payment penalties.
- Switch to electronic payments. Making the transition from issuing paper checks to electronic payments can be challenging, especially for businesses that have older accounting systems and cut hundreds or thousands of checks each month. But paying electronically can be a more efficient, time-saving tool for any business.
