5 Mistakes to Avoid in Your Business Cash Flow Management

Ever try to navigate a trip in your car looking solely into your rear view mirror?

That’s what it’s like trying to make important cash flow decisions using just your online bank balance.

Granted, the online bank balance is a decent indicator of things at a certain moment.

Unfortunately, it does not provide you any visibility into:

• Customer payments you expect in the coming days or weeks
• Checks and payments that have not cleared the bank yet
• Upcoming transactions that will deplete funds from your bank account

It’s essential to have a system that ties together not only where you are, but where things project to be over the coming weeks.

Quick…  Are you able to click a button for a report that provides a tally of the open bills and payments you have coming due?

Or do you just eyeball the stack of paper on your desk and guesstimate how much is owed?

When it comes to managing your cash flow, it’s essential to have the ability to quickly see:
• Who you owe?
• How much you owe?
• When it’s due?

In nerdy “accountant-speak”, this refers to having an accounts payable system. 

From the view of the small business owner, this is a critical element in your cash flow planning. All versions of QuickBooks (or any other accounting software) make it super simple to keep track of your open and unpaid bills!

Ah….  The order shipped and the invoice is out the door.

Nothing more to worry about, right?

Wrong.

Every dollar sitting in your open and unpaid customer invoices is a dollar that is not in your business bank account!

That’s why it’s essential to have a system in place to track and follow-up with those customers who have not yet paid you.

Navigate to the Accounts Receivable report in QuickBooks. Here you’ll find a wealth of information to help you manage the “money in” side of your business. Personally, I like the Open Invoices report the best!

From there, develop a system to contact those customers with payments due soon (all ok with the invoice you sent them?) or those who have slipped behind (when might they be paying you?)

Nailing the management of your open invoices is a key to your success when it comes to managing and planning your business cash flow.

Try this trick…

Grab some play money and walk around your shop floor. Start taping bills to the shelves to represent the value of the inventory stored there.

You’ll be amazed at how quickly this visual aid will show how much of your vital company cash is sitting on the shelf.

Even worse, as you’re moving from shelf to shelf, you may find yourself staring at a bunch of dust bunnies! An excellent indicator that inventory has been sitting around too long.

Every dollar sitting in your inventory is a dollar that cannot be used for other business needs. Just like the open customer invoices mentioned above.

Your inventory management system can easily provide you with a report that shows the quantity on hand and the total value of your inventory. Take advantage of that report to determine where you’re overstocked, and then put a plan in place to convert the stock to cash! You’ll be glad you did.

Does this describe your current “cash flow planning” system?

• Take the information from this report and re-type it into Excel
• Pull the information from that report and re-key it into Excel
• Manually set up formulas
• Repeat every day
• Pray that it’s accurate and you didn’t make any mistakes

It’s time to automate this process…

And that is exactly where CashFlowTool shines!

No more messing with re-typing data from various reports.

No more prayers that you didn’t mess up a formula.

CashFlowTool ties into QuickBooks (all versions) and seamlessly pulls together your bank information, incoming money (accounts receivable), and outgoing funds (accounts payable).