5 Bookkeeping Tips for Better Cash Flow
I’ve allowed myself to slow my roll with my business and really focus on working “on” my business rather than “in” my business. Of course, I’m taking care of my awesome clients but I’m working hard on building solid workflow systems because once that gate…that is quarantine…lifts, I’m coming out fighting. Fighting for good, quality clients that are in it to win it with me.
So, while I sit at my makeshift desk because my son has taken over my home office for homeschooling, I thought maybe now is a good time to talk about having better cash flow during these uncertain times of quarantine.
Here are four things to check within your bookkeeping software, to help with better cash flow.
Reconcile your accounts. If all of your transactions are in the bank feed, there is no way that your financial statements will reflect the true status of your business. QuickBooks Online makes it really easy with their reconcile account option. First, go to the bank feed to categorize and add the transactions to your books. Next, go to “Accounting,” then “Reconcile” and follow the steps. Don’t forget to have your bank statement to help you during your reconciliation, if needed.
Pay bills when due. There’s no reason to pay bills as soon as they arrive in the mail. Check the statements and schedule your payments according to their due date. If you pay all your bills at once, you may find yourself strapped for cash and unable to purchase critical supplies and materials needed for projects. You should have your vendor list up to date and all bills currently entered. Now prepare a Cash Flow Forecast to see your cash needs for a certain period of time.
Collect payments from customers. Timely payments from customers is crucial to positive cash flow. Not keeping tabs on collections from your customers can be a big part of your cash flow problem. QuickBooks Online has several Accounts Receivable Aging reports available that allow you to see which payments are due within 30/60/90/120 days. Simply download the most current report. For instance, QuickBooks Online has the “A/R Aging Detail Report” or the “A/R Aging Summary Report” and get some help in collecting those payments.
Cut expenses. Cutting unnecessary spending will be a tremendous help in lowering costs thereby increasing your cash flow and bottom line. Download the Income Statement for the year to date and check out your expenses. Are there things you can do without? Can you spend less in some places? Use a different vendor? Ask these questions to help you decide where to best cut your costs.
Budget. Budgeting allows you to create a spending plan and ensures you will have enough money for the things that are necessary to run your business. Following a budget and spending less will keep you out of debt or help reduce your current debt.
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