When you first opened your business, you probably based it on some kind of business plan. In that document, you considered your target market and what kind of product or service your company would provide. You also did some calculations to ensure that your Small Business could establish a cash flow. That’s the name of the game, and we have some thoughts to share about it.
Reaching the Break-Even Point
For new businesses, cash flow is one of the biggest factors that affects their ability to reach the projected break-even point. This is the point in time at which your investment of capital in the business gets recovered and you begin to make a profit. We understand that you need quality bookkeeping software to help track all of your incoming revenues and outgoing expenses. Our cloud-based bookkeeping software gives you electronic tools to do these activities and many more. On the one hand, you can keep the books and continuously monitor the financial position of your small business. On the other hand, our software helps you to easily create and send invoices electronically and through the mail to your clients.
The Relationship Between Cash Flow and Marketing
To stay in business, you must establish and maintain a market base and build relationships with clients. Just getting clients to make a purchase is the beginning. Once your product or service gets delivered to clients, you must ensure that your company gets paid. We like to help small business owners and freelancers understand the importance of having reliable bookkeeping software. This is a tool that helps you ensure cash flow and efficiently manage the billing relationships with your clients.
Studying Your Cash Flow
With bookkeeping software, it’s easy to perform some cash flow analysis. You want to examine trends, such as the rate at which your clients remit payment to you. In a typical business, this includes looking at clients that get behind in payments, such as 30 days past due, 60 days past due, and 90 days past due. Accounts that become more past due are unlikely to pay your business any time soon. They won’t help you make your rent and expenses this month. In the end, your company cannot stay profitable by allowing clients to become past due.
Cash Flow and Debt Collections
Any business that bills clients must also address the hassles of debt collection. Any invoice that you send out should be matched in the future with a payment or a collection action. Some businesses will write off bad debts on their taxes at the end of the year, but that is a conversation for another day with your tax specialist. Our clients appreciate how easy it is to tackle monthly collection efforts by pulling different reports from our cloud-based software. You can use different collection efforts, such as writing letters and making reminder phone calls, to encourage clients to pay. In the end, if they don’t pay, you can report them to the credit bureaus and decide whether to take them to small claims court. With our bookkeeping software, you can easily track the age of accounts. You can focus your marketing efforts and customer service activities on clients who pay on time. You can decide whether to cut ties with clients who constantly get behind in paying you for goods or services.
We want your business to establish a steady cash flow and then track and manage incoming payments easily over time. With cloud-based bookkeeping software, you get to use all of your electronic tools on a single dashboard. You can easily analyze the sources of income and the ages of outstanding client accounts. For more ideas on cash flow management, we hope that you will contact us today.