The success of your business will depend on a few variables, but one of the most important will be cash flow. Cash flow will tell you how much money is actually available to your business at any given moment. Simply speaking, you will be able to calculate your cash flow by totaling all of your business’ obligations and subtracting that from your business’ income. Cash flow is important in order to be able to fund your business on a month-to-month basis. Obviously, if you are in the red, or negative at the end of each month, your business is doing poorly, and chances are you will be unable to keep your business afloat for very long. We’ve outlined a few tips to help you stay on top of the pulse of your business.
Tip 1: Create a Cash Flow Budget
First, create a cash flow budget which you should stick to on a monthly basis. Start off your budget by estimating all of your expenses. Establish a ledger listing all of your vendors and the associated expenses each month. Then you should also do the same for your clients. List your clients and list out the expected or estimated income for each month. It’s important to note that while your income is important it’s just as critical to stay on top of your debts. You should make sure that all of your accounts are paid in a timely manner in order to have a predictable flow of cash to your business.
Remember, we’re here to help. If you’re struggling to create and stick to your cashflow budget, give us a call.
Tip 2: Follow-up with your Accountant on Your Taxes to Better Cash Flow
Be sure to meet up with your accountant during the year to speak about cash flow, and to get a better sense of what tax deductions your business may want to take advantage of in order to better your cash flow.
Tax rules change every year and it’s ever important to stay on top of the newest rules. Your accountant will be able to instruct you on what items you will need to track and how frequently in order to best leverage the most current tax laws in a legal, detailed and efficient manner.
At AVB, we like to meet regularly with our clients (not just at Tax time) to help plan and improve results for the year ahead. Often it’s too late when June 30 comes around to make any significant improvements to your tax returns, which is why we like to take a more hands-on approach to ensure you’re trading well thoughout the entire year.
Tip 3: Consider a Top-of-the-Line Software Package to Track Cash Flow
There is no better investment for your business than a top-of-the-line software package. There are quite a few on the market, so there is no shortage to choose from, in our experience packages such as Reckon (also known as Quickbooks) and Xero are two of the best.
It is recommended that you do your research, talk to our trainers and read reviews on those available so that you can determine which software package would best suit the budget and cash flow needs of your business. Be sure to leverage a trial copy of any software packages you are interested in first, so that you get to test drive it. And then, consider appropriate training, to ensure you’re optimizing your output. AVB run regular training sessions which will ensure you and your team are trained in the software.
The success of any business is critical especially when the owner depends on this business for his/her livelihood. Be sure to hold on tight to the reins of your business by closely monitoring cash flow. This can make or break a new business especially, and will surely help any business that intends to grow aggressively.
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