Last editedApr 20222 min read
Cash flow visibility is one of the most important ways a business can gain insight into their financial health. In this post, we’ll run through the meaning of cash flow visibility means, as well as guide you through the topic with some tips for making improvements to your business’s cash flow visibility.
What is cash flow?
The termcash flow refers to the total amount of cash which enters and leaves a business. Any cash coming in, known as receivables, is called inflow, while money going out of a company is the cash outflow.
Cash flow visibility definition
Cash flow visibility refers to the clarity and comprehensiveness of cash flow charts, records and projections. Good cash flow visibility means all money coming in and out of a business is accounted for. This gives accountants and treasurers the ability to clearly see where things might go awry, and just generally what they can expect in terms of cash flow over the coming months and even years. It’s therefore an important tool for both staying afloat as a business and planning financial strategies for the future.
Being able to precisely and sensibly forecast cash flow both in the short-term and long-term relies on the accurate compiling of payment and expenditures.
Ways to improve cash flow visibility
1)Streamline employee expense reporting
The simpler it is for employees to both track and report their various expenses, the more probable it is they will do so promptly and accurately. The introduction of software which allows you to easily track expenses, such as QuickBooks and Rydoo, mean employees can now do this on their smartphone, even photographing and uploading receipts in real time. Consider implementing this software in the daily running of your business, as well as emphasizing the importance of accurate and timely tracking of expenses to your employees. As a result, you’ll see your cash flow visibility improve immeasurably.
2) Link all business credit cards to an expense management system
In order to improve the accuracy of your cash flow visibility, it can be useful to link up any corporate credit cards in use to an expense management system. This way, all expenses made across each and every business credit card can be recorded and made available in full transparency. While you can instead rely on totaling up individual monthly statements, having all expense information from all the cards in one place will make keeping track of the whole process far easier and ensure reports are instantaneously updated, rather than updated on a monthly basis.
3) Implement spend-controls and analytics
Most automated expense report software solutions will offer a spending control tool allowing you to approve or decline expenses as and when they occur. This can help keep errors to a minimum, and reduce the time it typically takes for employees and superiors to exchange back and forth before an expense can be approved or denied.
In addition, expense report software offers tools for analyzing and segmenting different expenses, which can inform future cash flow strategies. For example, analytics can offer an insight into the conduct and tendencies of employees, ensuring that they carry out their role according to company regulation. Being able to track activity in this way can provide a means of eliminating any areas of risk when it comes to expenses.
The importance of cash flow visibility
Healthy cash flow is integral to running a successful business. Having a clear idea of inflow and outflow on a regular basis will ensure you make good decisions for your company with regards to investments, growth and any plans you have for the future. Staying on top of your cash flow visibility will therefore aid you moving forward with your business.
We can help
GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.