So, the foundations are in place – what now?
Poor cash flow acts as a drag on your business performance, just as a chest infection would affect the performance of a professional athlete. Cash flow optimisation is similar to recovering after such an infection, a return to full strength and stamina. Once your business is fit and healthy in terms of its cash flow, you'll want to make sure it stays that way.
Having good cash flow isn't a one-time aspiration. Your cash flow should be maintained in its optimum state all the time, for the good of your business. All strategic planning for your business must take cash flow into account. If you get this right, almost everything else falls into place.
Reporting apps and other tools to help you maintain good cash flow
On its own, an app won't solve your problems. Any new software or app needs to be used properly and tied into your accounting work-flow, if it's to have a positive impact.
For this reason the first place to start is by talking to your accountant. He or she will already have their own preferred apps, ones that they'll have tried and tested with other customers. Ask them what they recommend.
There's a good chance that your accountant already uses online accounting software, and will encourage you to do the same. This is an excellent idea because it makes life simpler for you (and for your accountant) and opens the door to countless plug-in apps to reduce the workload even further.
Using cash flow forecasts
Where is your business heading? What will your cash situation be like three months, six months, a year from now? Cash flow forecasts can help you find the answers. They can warn of potential lean periods ahead, times when you might need extra capital. They can also help you identify periods of business prosperity, when you can afford to expand your operations.
“Find out how cash flow impacts the business. How will you be able to carry on your trade? Where can you get some cash to tide you over? Is it something you can fund yourself? Look at payment terms with your suppliers. Make sure to clearly communicate terms and payment dates.” - Cheryl Price, Accountant at CH Accountancy
If you use decent accounting software, you'll find it easy to generate cash flow forecasts. You can also create cash flow statements, which are useful for showing to potential investors or lenders. Cash flow statements present a clear picture of the cash position of your company, but it's a good idea to ask your accountant for help. Many factors should be taken into account. Bookkeepers and accountants can also help you free up some cash, by creating a cash plan for your business.