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    Online cash flow management

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    The U.S. Bank Cash Flow Manager credit line can help ensure you have working capital for Apply online for up to a $250000 line of credit with U.S. Bank. Here are tips on how to manage cash flow better and improve your business often high-interest loans or lines of credit offered by online lenders. Introducing Cash Flow Monitor from Bank of America – our new dashboard available through Online and Mobile Banking. With Cash Flow Monitor you can keep.
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    10 Cash Flow Management Tips to Grow Your Business

    6 Min. Read

    There are few things more important to your business than cash flow. With a healthy cash flow, you can pay your debts on time, sustain your operations and expand your business. Without it, you’re only a few missteps away from financial ruin.

    In this guide, you’ll learn what good cash flow management looks like, and we’ll let you in on 10 of our favorite strategies to get you back in the black.

    What Does Managing Cash Flow Mean?

    Cash flow management is a set of practices and strategies to help you track, analyze and improve the financials of your business. The goal of cash flow management is to get you in the “green,” also known as positive cash flow, where you have more money coming in than going out.

    In commerce and industry, cash is king. Managing your financials well is important if you want to keep your business afloat, but it’s even more crucial if you have plans of growing and expanding your brand. Plus, it can help you predict and plan for cash shortages and surpluses.

    Successful financial management involves balancing three elements: accounts receivable (what you chase bank secured credit card owed by the customer), accounts payable (what you owe to suppliers) and shortfalls (the amount of money you owe that exceeds your available funds).

    It’s critical that one element doesn’t overtake the others. If your clients owe you too much, then you won’t have enough money coming in. Owing too much to your suppliers means that you’ll have too much money going out. Either scenario results in the same thing: negative cash flow.

    Top Tips for Effective Cash Flow Management

    There are two main strategies that improve your cash flow: increasing the amount of incoming money and reducing the amount of outgoing money. Some business owners, when they have financial problems, resort to using a credit card or opening a line of credit—and you don’t need us to tell you what a bad idea that is! Here are nice other ways small businesses can promote a healthier financial situation.

    Know How Much You Need to Break Even

    Before you can work towards a positive cash flow, you need to know how much you need to earn to simply break even. If you go over the break-even point, you’re doing something right. If you fall short of it (consistently), then there’s an issue that needs addressing.

    Have an Emergency Cash Reserve

    In the same way that people should have emergency funds, businesses should always have emergency cash reserves. This allows you some flexibility and security during economic downturns. A good rule of thumb is to have enough to cover at least three to six months worth of expenses.

    Set Invoice Timelines and Terms

    It’s imperative to establish very clear payment terms, in writing, before taking on a new client or supplier. Make sure to lay out when payments for invoices are expected, whether it’s immediately upon invoice or within 15, 30 or 60 days. 

    For particularly resource-heavy projects, we recommend that you ask for an initial deposit so that you have some cash to cover necessary expenses. Then, ask for the rest of the payment upon reaching certain milestones or deliverables.

    Encourage Easy, Early Payments

    An IOU from a client is virtually the same as not having money. Encourage your customers to pay early—which will benefit you financially—by offering special deals or discounts if they pay ahead of time. 

    Put Cash Flow over Profit

    Most people think that the secret to entrepreneurial success is profit, profit, profit. But actually, it’s all about how you manage your cash flow. Always check your earnings against your break-even point. If you’re earning more than that yet money still feels tight, you probably have an issue with your accounts payable, accounts receivable or shortfalls.

    Assign Someone to Monitor Your Cash Flow

    Keeping track of your cash flow is an important part of owning a business, but it shouldn’t be the only thing you focus on. Get a trusted employee (or your accountant) to take care of cash flow monitoring for you—just make sure that you’re always up-to-date with the numbers, online cash flow management if you’re going way over or under your break-even point.

    Upgrade from a Spreadsheet to Software

    Decades ago, you had to tediously record every transaction manually to monitor your cash flow. Today, you have the advantage of technology, so use it! Store your spreadsheets in the cloud for easy access, or better yet, use accounting software like FreshBooks to stay on top of your cash flow.

    Drive Sales with Incentives or Promotions

    Promotions are a great way to boost sales quickly and effectively. You could run a contest, start a customer loyalty and referral program, or drum up publicity through strategic social media posting.

    You can also use incentives to control the online cash flow management of work. If you are getting more customers than you can handle, you don’t have to turn down jobs—offer a discount if the client is willing to postpone the work. Not only does this help you juggle multiple projects without straining your resources, but it also guarantees that you’ll have a steady stream of cash in the coming months. 

    Clearing out your inventory can really help kick-start healthy cash flow. Try to employ discount sales and planned promotions to move products as fast as possible.

    Delay or Reduce Your Expenses

    While bringing in more money is always a good cash flow management strategy, cutting down on costs can achieve similar results in a different way.

    If you have upcoming payments, see if you can negotiate for an extension. Delay for as long as possible, but even just a few weeks or even days can significantly impact your cash flow. If you can’t afford full-time employees, hire part-time workers to fill in your staffing gaps. If you have unused equipment, cut down on storage costs (and bring in some extra cash) by renting or leasing out equipment. Find other ways to increase your profit margins—cheaper suppliers and higher prices are both good places to start.

    Clear out Your Inventory

    Clearing out your inventory can really help kick-start healthy cash flow. Try to employ discount sales and planned promotions to move products as fast as possible.


    Not all of these strategies will work for every business, so choose the one that makes the most sense for your brand. And don’t be scared to combine multiple approaches—whatever it takes to get your cash flow up to speed. Do it successfully, and your company may be able to survive and thrive even in times of financial instability.



    Four Keys to Cash Management

    A study done by U.S. Bank revealed that more than eighty percent of business failures are due to poor cash management. To ensure that your company beats these odds, apply for amazon store card credit builder essential that you have a clear understanding of several key elements of proper cash management.

    Create an Efficient Accounts Receivable Collection Process

    At any one time, a significant portion of any business’s balance sheets will be tied up in receivables. You don’t have to have a background in finance to know that slow accounts receivable collection can cause a significant strain on business operations. The money you are owed can be in the receivables phase for months, especially if you’re managing a B2B company. This means that your business will have to manage with less cash what time does pickup close at walmart hand.

    A clearly defined and strictly followed process can help ease the strain associated with collecting on receivables. First, invoices should be sent to customers as soon as goods or services are rendered, clearly indicating preferred method of payment, payment terms and due date. Second, late payments should be followed up on immediately and consistently. These simple practices can help speed the rate at which cash gets back into the business’s bank account. Good customer service and polite follow-up should not be forgotten, of course, in order to maintain positive relationships and repeat business.

    Take Advantage of Payment Terms

    As an entrepreneur, manager or student, you know the toll that late payments can take on a business. However, being a good corporate citizen doesn’t mean you have to pay your suppliers early. It might seem like you’re simply being organized and keeping suppliers balanced, but taking money out of your accounts before bills are due increases the likelihood of a cash flow issue. Taking advantage of payment terms and when bills are due can help keep money in your hands longer, preventing potential cash flow issues while your business may be waiting to get paid by others.

    Keep Operating Expenses Under Control

    Operating expenses can contribute to the depletion of financial reserves. Many businesses regularly evaluate their suppliers, but they don’t often think about how much they’re spending on other operating costs, including employee wages, payroll services, utility bills, and insurance costs. It’s important to shop around regularly to ensure you’re getting the best deal.

    Further, experts suggest identifying your five largest expenses and looking for ways to reduce them each year. But how exactly can you do that? You may be able to reduce your operating expenses by implementing annual audits. Taking a look at existing contracts and seeing what can be amended is one way to attempt to lower costs; completing yearly employee reviews to identify underperformance or inefficient use of resources is another. Also, look at your supply chains to see if any steps can be eliminated. Small adjustments can add up and lead to positive change.

    Have a Plan for Excess Cash

    Effective business cash management is all about increasing the amount of money that comes into a business and minimizing the amount that goes out. However, that equation doesn’t tell the entire story. The final key to cash management is determining how to use excess funds. Excess cash may be used to pay down taxes, buy equipment, or help fund expansion efforts, to call out just a few examples.

    It’s also important to recognize whether the excess cash will be required in the short-term, the mid-range, or the long-term. Unless there is an immediate need for the excess cash, the business could also invest it and make it work for them.

    These are just a few essential elements to proper cash management. With a clear understanding of these basics, you’ll give your business a better chance at success.

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    Your company's cash flow forecast is the fuel that keeps things going and your business growing. The money coming in gets allocated to your employees, suppliers and other expenses. If you don't know what the future holds, then you'll have a hard american express bank savings account interest rate planning your investments and taking advantage of promising opportunities.

    The cash flow forecast shows you estimates of your incoming revenue for a certain period. Typically, you have a short-term forecast that gives you visibility into the near future and a long-term view that assists you with larger plans. QuickBooks can help you calculate expected cash flow. Use this process to put your report together. Please note that this report type is currently only available in QuickBooks Fidelity 529 visa login Edition, not QuickBooks Online Edition.

    1. Open the QuickBooks application.
    2. Click "Reports."
    3. Choose the "Company & Financial" option.
    4. Click "Cash Flow Forecast."
    5. View the report that QuickBooks puts together from your receivables, payables and bank accounts. You can adjust this report based on specified periods, compensate for customers that you know are going to miss their due dates, and shift the date range. If the report doesn't seem realistic, review the information that you have in your QuickBooks account. You may have missed an important purchase order, invoice or another detail that makes a big difference.
    6. Compare your projection to previous cash flows with the help of a Statement of Cash Flows.
    7. Go to the Reports menu and click "All Reports."
    8. Choose "Business Overview."
    9. Select the option "Statement of Cash Flows."
    10. This report shows you the actual cash flow that you had over the specified period. The historical information will help you understand how your forecasts fall into a certain range, the factors influencing your profits and losses, and how you can adjust your business activities to improve your cash flow.

    QuickBooks also has a Cash Flow Projector feature that is optimized for short-term forecasts. You get a good look at the next six weeks of your company's financial future, which works well when you're ensuring that all the bills and employees will get paid in the next month.

    1. Go to the "Budgeting and Planning" option in the "Company" menu.
    2. Click "Cash Flow Projector."
    3. Input your starting cash balance. If you're not sure what that is, either estimate the number or look at your past month to get a baseline.
    4. Put your predicted cash receipts into the Cash Inflows section. Do your best to include all revenue sources so you can get a fairly accurate picture of your cash flow. Start with the steady income, and add in any payments that are likely to process during the six-week time span.
    5. Type your business expenses into the Cash Outflows field. You should already have your regular monthly costs in QuickBooks, but make sure you don't overlook one-time fees and those that recur on a quarterly or annual basis.
    6. Look at the report and see where your business cash flow ends up over the next six weeks. When you're putting figures into the forms on this tool, click "Preview" to see the ways that your projections adjust. You can use this functionality to see what happens when certain deals go through, drastic changes occur to your expenses, or an emergency situation requires more overhead.

    These powerful tools in QuickBooks help you stay on track with your company growth plans. Make sure to check them often, especially when you have unexpected expenses or successes.

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    What's next for cash flow management?

    Accountants are often ahead of other types of business when it comes to making the best use of new methods and technology. There are already many apps and software packages that can streamline cash flow management.

    Various apps allow you to upload and process receipts just by taking photos of them, or sign customers up to 'pull' payment systems at the click of a button, or incorporate POS transactions directly into accounts ledgers, and much more.

    “I use a mixture of tools to ensure prompt payment,” says Heather Smith, Chartered Accountant. “I use the time tracking tool MinuteDock, to record comprehensive notes associated with client activities. These compile and push into my online accounting solution. From there I can invoice instantly, and the bonus is the invoices are online, so I know when my clients have viewed them. My clients are signed up to GoCardless so payment is collected on the due date, paid into my bank account and automatically reconciled in my accounts. I also use bills and expense scanning solution Receipt Bank which automatically populates my accounts payable dashboard.”

    Accounting software and related apps are making cash flow management simpler and more convenient. As this trend continues, we'll see greater use of online accounting and payment systems, and less use of paper for sending invoices and other accounts documents. Where accounting is concerned, the paperless office is almost here.

    To get the most out of the latest tools and apps, you need your customers to switch to online or automated payment methods too – you can then integrate your payments into your existing software and benefit from automatic reconciliation and real time updates on the status of each payment. That's now easier than ever. GoCardless, for example, integrates major accounting software (like Xero and QuickBooks) and allows you to take payments by Direct Debit whenever they are due – with payments then automatically reconciled against your invoices.

    “What do you want out of this? What about family? What will change your life? [.] £2K per month? £5K per month? Start with that. Decide what you need to happen and then build the business around that. You can't have clients dictating to you when they will pay. Either move away from those clients to better-paying ones or make sure they play by your rules.” - James Ashford, Founder, MyAccountancyPlace

    What does all of this mean for your business?

    It means a smoother and quicker inbound flow of money. If your accounts payable status remains unchanged, you'll have improved your cash flow position considerably. Simply, that means your business will be healthier and more likely to succeed.

    Looking further into the future, the use of blockchain (distributed recording of payment transactions without a bank) is likely to increase. However, such payment methods are still in their infancy and not something you're likely to have to worry about until their online cash flow management becomes more widespread.

    The tools you need to fix and manage your cash flow are available right now. They're easy to use, inexpensive and they'll fit right in with your workflow. Get started today.

    Interested in collecting payments by Direct Debit?

    Find out if online Direct Debit is right for your business

    Read the guide


    What Is Cash Management, And How Can It Benefit My Business?

    Cash Management and Treasury Management products and services are typically considered to be synonymous. They’re viewed as “just another commodity” that banks offer. However, wire transfers, sweep accounts, and merchant services are all cash management products that provide business owners with unique opportunities to increase profit, and they aren’t the same.

    If you’re a business owner researching how to fix liquidity problems, here’s some information you will need to know about cash management and how it can reignite your cashflow.


    What is cash management?

    In a banking institution, the term Cash Management refers to the day-to-day administration of managing cash inflows and outflows. Because of the multitude of cash transactions on a daily basis, they must be managed.

    The ultimate goal of cash management is to maximize liquidity and minimize the cost of funds.


    Why is cash management important to my business?

    When it comes to creating and sustaining a company’s financial stability, cash management is a key component. Since “cash” is the primary asset used to pay obligations (whether you’re an individual or company), it must be managed accordingly to maximize earnings. This impacts future growth for the company. Maintaining cash balances while earning a return on idle cash are also top concerns.

    Most of the time, cash management can be integrated with your company’s online banking. That way, you and your business administrators have access to funds all day, every single day.

    If you fully integrate your business with online banking, it will provide you with greater control of your cash flows and accessibility. This is typically customizable, as each business is different and might require a different suite of cash management options and services.


    What is ACH?

    Automated Clearing House (ACH) is an electronic funds-transfer system that facilitates payments in the U.S. The ACH is run by the National Automated Clearing House Association (NACHA). Most debit and credit transactions made through the ACH will clear that same day. Organizations that create these transactions are called ACH Originators.

    When ACH transactions are made, they are electronic payments that are created when a customer gives an ACH originating institution authorization to debit or credit directly from or to the customer’s checking or savings account. An example would be an employer offering payroll Direct Deposit.


    Is there a difference between cash management and treasury management?

    In banking, both “Cash Management” and “Treasury Management” are terms for certain services related to cash flow. Though these terms are commonly used interchangeably, the scope of Treasury Management is much larger and includes a company’s funding and investment activities.

    When finance professionals discuss services under the “cash management” umbrella, they’re usually referring to services such as wire transfers, sweep accounts, merchant services, and business credit options.


    At Field & Main, cash management means business growth.

    Here are some success stories that are a direct result of it.

    Carl Powers has been a banking professional for 29 years. He’s worked with businesses of all sizes and profit margins. He’s managed to capture some special moments.

    Technology & Teamwork: Maneuvering Around Money Mishaps

    Carl recently met with a business owner, and after several discussions, the owner decided to establish a business deposit relationship.

    The Challenge
    The owner needed to make the business banking process more convenient than the other current banking partners which were more conveniently located. Given the proximity of his business in relationship to Field & Main, the solution was simple: utilize technology!

    Given the nature of the business, the owner needed to reduce the amount of travel and time away from the office to make deposits. The solution was to use our “Remote Capture Deposit” service to make deposits on the same day without leaving the office.

    The team at Field & Main used their problem-solving skills to establish themselves as a true financial partner with this business for life. After installing this technology, several other convenient cash management products were opened, creating additional opportunities for the organization’s future.

    Implementing Proper Financial Analysis: How Field & Main Took One Business to the Next Level

    When conversing with one particular business owner, Field & Main presented this question: “When is the last time your merchant credit card processing statement was reviewed to ensure competitive processing costs were being applied?”

    His response online cash flow management is an expected expense if customers are going to be given this payment option!”

    After explaining the importance of an annual statement review, the potential cost savings, and with the bank’s local credit card representation, the business owner agreed for the bank to provide a no-cost, no-obligation, side-by-side cost comparison.

    After this detailed analysis was completed, and after the comparison was presented, the business owner was finally aware of how their expenses were determined and what the potential savings could be.

    Proper financial analysis can go a long way!

    At Field & Main, we know that cash management builds businesses. We’re here to help you steer your cash flow in the right direction.

    Whether you’re interested in Remote Deposit Capture, Positive Pay, Merchant Card Services, or any other cash management product, we can offer guidance as to how you can easily build your profits.

    Click here to learn more about the business services that we offer.

    Let’s start our relationship today. Click here to speak to a Field & Main cash management expert.


    Understanding Cash Flow

    Cash flow can be complicated, but it’s not rocket science. While there are many moving parts, how they function together is easier to understand when you break it down into individual components.

    In this article we’ll take an in-depth look at the cash flow fundamentals every business must master to be successful. Whether you run a small company with a limited number of customers or serve a worldwide client base, the insights shared here can make cash flow work for you.

    Why Cash Flow is So Important

    According to the Small Business Administration (SBA), one of the top reasons businesses fail is due to cash flow problems. The dysfunction can stem from a variety of factors ranging from failure to collect payments for goods and services on time, to poor accounting and recordkeeping. Regardless of the cause, the bottom line is that problems in any area of the cash flow process can have a ripple effect that can seriously jeopardize the future of your business. And that’s reason enough to understand the basics.

    Several Definitions, One Goal

    While the definition of cash flow can vary depending on who you talk to (or what you Google), the broadest and simplest meaning is ‘the measure of money that comes in and out of a business account over a given period of time.’ “For most companies, this means what remains in its business checking account at the end of the month, but some businesses measure cash flow on a weekly or even daily basis,” says Morgan Dornfeldt, Cash Management Advisor at Bank Five Nine.

    Regardless of the time frame, the goal for every business is the same: to have more money flowing into the account than flowing out. In bank accounting terms, this is called having a positive cash flow position. By the same token, if the opposite is true—less money is coming in than going out—it’s called a negative cash flow position.

    According to Dornfeldt, the benefits of a positive cash flow position go beyond the financial. While having money left over at the end of a cycle gives you the option of investing in the business or saving for future growth, it also provides greater peace of mind. “At a minimum, you’ll sleep better at night as you consider the future of your business,” she says.

    A negative cash flow, on the other hand, is a sign that something needs adjusting. And while a cycle or two of negative cash flow may not spell immediate disaster, it’s an unsustainable long-term position that needs to be addressed. Negative cash flow will eat away at surplus and sends a business deep into debt if left unchecked.

    The Ins and Outs

    So, what determines whether a business’ cash flow is positive or negative? According to Dornfeldt, many banks break it down into three categories consisting of operating activities, investing activities and financing activities. In addition, Dornfeldt stresses that reporting also plays a critical role.

    We take a closer look at each area here:

    Operating Activities

    Simply put, operating activities consist of money coming into and going out of the business account. “Think of the payment methods your business accepts as your incoming,” Dornfeldt says. Whether you accept cash, checks, merchant services, such as credit and debit card payments or anything else, they all fall into this category.

    The goal is to get your hands on incoming funds as quickly as possible. For example, if you’re a merchant, cash and card payments ensure funds arrive fairly quickly. If you accept checks, it can slow things down and there’s always the risk of a check not clearing.

    If you invoice on a net 15- or 30-day basis, the process slows down even further—and that’s assuming your customers are paying on time. According to a survey conducted by PaySimple, businesses can expect to be paid at least two weeks late on average. And more than half of the businesses surveyed reported clients that paid no sooner than two months after being invoiced.

    Late payments can have an immediate impact on a business’ cash flow position. To speed up the process Dornfeldt recommends reviewing your payment terms and adjusting as needed. “It could be as simple as rewording your invoices from ‘net 30 days’ to ‘within 30 days’,” she says. For services that take longer to complete, you might consider invoicing half up front with the remainder due once the project is complete.

    Money leaving the account is what your business pays to cover expenses, and it can exit a variety of ways, including by check, Automated Clearing House (ACH) payment, wire transfer, online bill pay or debit card. The key here is to hang onto your money as long as you can which gives you more time to put the online cash flow management to work for your business.

    If you’re getting paid quickly and holding onto your funds as long as possible and still having cash flow problems, you’ll have to identify where the problem exists. “You may be paying too much for rent or not charging enough for the products you’re selling,” Dornfeldt says. “Or, you could be spending too much time developing products that aren’t making money yet.”

    Bank Five Nine recommends a thorough look at everything expense related to find what the cause might be.

    Investing Activities

    Assuming your cash is flowing in and out in a timely manner and your position at the end of the cycle is positive, the next challenge is figuring out what to do with the funds you’re accumulating. There are a variety of options for businesses with positive cash flow. We look at three popular choices here:

    An investment account into which excess funds are ‘swept’ at the end of the business day. Interest rates are typically higher with sweep accounts.

    • Business Money Market or Savings Account

    An interest-earning deposit account designed for ‘rainy day’ funds. Interest rates are usually tiered based on balances. Preauthorized withdrawals are allowed but limited.

    • Business Checking Account

    Keeping excess funds in the business checking account is always an option.

    The account you choose depends on your business goals. “The best way to decide is to sit down with your business banker and discuss your situation,” says Dornfeldt.

    Financing Activities

    Even businesses with excess funds at the end of the cycle will need to finance some expenses from time to time. Unexpected expenses can cause short-term borrowing needs, and there are times when financing makes more sense than tapping into the funds you have on hand.

    “When a business needs financing, it’s important to choose a solution that’s right for the company,” says Matt Schwechel, SVP, Director of Commercial Lending, Bank Five Nine. This may mean more than one type of credit.

    Schwechel advises adding a line of credit to the business account as an insurance policy against unexpected expenses on those occasional months of negative cash flow. Business lines of credit, in general, feature lower interest rates and are typically reserved for higher ticket ally bank customer service phone like large shipments or equipment.

    For everyday borrowing, Schwechel recommends a business credit card. They can be used to cover nearly any expense and work best when you pay down your balances quickly.

    “While you may have a specific need in mind when you apply for financing, your best bet is to discuss it with your business banker,” says Schwechel. He or she can make sure you’re getting the best vehicle for the need at hand. Your banker can also look at your overall financial picture to assess if your cash flow and financing are in sync.


    Of course, a critical factor in all of this is reporting—the ability to see all of your cash flow how to accept money from zelle us bank at a given point in what time does pickup close at walmart. Fortunately, we live in an age where this information is literally at our fingertips.

    “Online banking makes it incredibly easy for businesses to keep tabs on all areas that impact cash flow,” says Dornfeldt. In addition to traditional online banking via the desktop or laptop, business owners also have access to mobile apps that provide even greater convenience and access. A monthly statement—also available online—can provide additional insights into cash flow.

    By monitoring operating, investing and financing activities available through these resources, keeping the pulse of your cash flow position is fairly simple.

    Your Role

    As a business owner you have the ability to directly impact your cash flow position by understanding the fundamentals and staying on top of things. For some, this is an intuitive process but for many others, it’s not. “Most business owners aren’t in the business of managing cash flow,” online cash flow management says. “Just as most cash flow managers aren’t in the business of brewing craft beer or whatever they do for a living.”

    If you have the time and aptitude to tackle it yourself, Dornfeldt recommends giving it a shot. If not, however, he recommends reaching out before it’s too late. “Enlisting the resources online cash flow management a business banking professional can spell the difference between success and failure.”

    We’re Here to Help

    If you’d like to discuss your business banking and cash flow management needs, Bank Five Nine is here to help. We’re here to help you understand the real-world factors that impact your business, so you can achieve long-term success.

    Contact Morgan Dornfeldt, Cash Management Advisor at (262) 560-6365 or for your commercial lending needs, call Matt Schwechel, Senior Vice President, Director of Commercial Lending at (262) 670-3021. We look forward to hearing from you.


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    You can keep an eye on cash flow by consulting cash flow statements. They’re one of three essential statements for running your business—the other two are income statements and balance sheets.

    Cash flow statements have one main functionality: seeing where your cash has moved during a set reporting period. Here’s an example:

    Cash Flow Statement 1

    (If you want to plug your own numbers in, you can download our free cash flow statement template.)

    Cool table. What does it mean?

    Okay, let’s break down Big Tex’s company’s cash flow into three sections so he can understand the financial health of his business.

    • Cash Flow from Operations is the amount of money moving in and out of the business in relation to what Big Tex does—renting and servicing mechanical bulls.

    • Cash Flow from Investing is the amount of money moving in and out of Big Tex’s business due to gains and losses investing. In Tex’s case, that involves buying equipment.

    • Cash Flow from Financing is the amount of money moving in and out of the business due to financing from lenders such as loans or lines of credit.

    Each of these categories contains different accounts. Think of these categories as envelopes into which your cash is organized.

    Your income statements and balance sheets show money in different accounts, even if the cash isn’t actually there. Your cash flow statements reverse that information.

    For instance, “Accounts Receivable” is where you track the money owed to you. If you were to look at Tex’s income statement for July, you’d see he invoiced clients $3,000—hence the “Increase in Accounts Receivable” above.

    But Tex doesn’t have the cash yet. So the cash flow statement takes that $3,000 and turns it into ($3,000). That means $3,000 is being taken back out of Accounts Receivable.

    In accounting, when a number is black, that means it’s being added to an account. When it’s in (brackets) or red, the money is being subtracted. That’s why business people say it’s good to be “in the black.”

    The indirect vs. the direct method

    Cash flow statements are generated using two different methods—the direct and the indirect.

    Most small- and medium-sized businesses favor the indirect method. That’s because it’s relatively simple. Using this method, you start with your net income for a period and then make changes in order to see how much cash you have on hand. Big Tex uses the indirect method.

    The direct method is typical for larger businesses. With this method, you list out all your cash income and expenses for the given period. This means really digging into your financial records and figuring out what was paid with cash and what wasn’t. It takes more time to do.

    How to get cash flow statements

    If you’ve already got balance sheets and income statements on hand, you can try to do the math yourself and deposit cash to usaa checking account your own cash flow statement.

    If you’d like to save time and energy, though, you have other options.

    • Use accounting software. It can usually online cash flow management cash flow statements for you. However, the statement won’t be accurate unless the info you’ve entered is, too. Prices vary for different software suites or cloud-based services.

    • Hire a bookkeeper. Charging $20 – 50 per hour, a bookkeeper will use your transaction history to generate cash flow statements—and other financial statements—for your business.

    • Let Bench do it for you. Your Bench team will do your bookkeeping monthly and create cash flow statements for you upon request.

    How to calculate your operating cash flow (OCF)

    Cash flow statements are by far the most effective tool for analyzing your business’s cash flow. That being said, by calculating your OCF—also called cash flow from operations—you can quickly see how much cash you have to work with.

    Simply put, you calculate OCF wells fargo bank branch locations near me the following formula:

    OCF = Total Revenue – Operating Expenses

    Let’s say we’re calculating cash flow for the prior month. Your total revenue is how much money has come into your bank account—via accounts receivable, direct sales, or a mixture of the two. Total revenue does not include money you make from investments. Your operating expenses are everything you’ve spent in order to keep your business running and produce your product or service.

    Calculating OCF doesn’t just prevent you from overdrawing your bank account. Tracking it over time can also tell you whether it’s increasing or decreasing and help you plan how to change that.

    Keep in mind that, unlike cash flow statements, OCF won’t tell you exactly where your money is going to or coming from.

    Managing cash flow

    Let’s go back to Tex and his mechanical bull rentals and servicing business. Tex has expanded to dominate the mechanical bull market in the state of Oregon—business is going well.

    But Tex’s accountant, Pearl, has been on his case lately. Pearl says Tex needs to spend more time on “cash flow analysis” instead of just throwing his statements in a filing cabinet. According to her, cash flow is the lifeblood of small businesses—and if Tex isn’t proactive about his cash flow management, things could start to go south.

    Here’s what Tex can do with his statements in order to manage cash flow.

    Make sure there’s rockland county community college rv show cash on hand

    Tex’s cash flow statement for September doesn’t look so hot:

    Cash Flow Statement 2

    Even though net income for the month was decent, cash flow was low—just $1,000 to work with. How come?

    Tex was feeling good—he invoiced clients for $8,000 (Increase in Accounts Receivable), so he knew money was on its way. Then, suddenly, there was an end-of-summer sale on novelty cowboy hats. Tex went a little crazy—he spent $7,000 (Increase in Inventory) on novelty hats to include as prizes with his mechanical bull rentals.

    The problem is, even if Tex has $7,000 worth of cowboy hats sitting in his garage, that’s $7,000 that he can no longer spend. And even though he’s got $8,000 in Accounts Receivable, he hasn’t been paid yet. That’s why his cash flow for the month is a measly $1,000.

    Luckily, Tex can look at his cash flow statement, see 1st gen cummins craigslist up, and make changes in the future to ensure his cash balance stays healthy. For instance, he could refuse to let Accounts Receivable burn a hole in his pocket next time sequined Stetsons go on sale.

    Tracking how you’ve spent your money

    After the cowboy hat incident, Tex decides walmart money card balance espanol dig through some past cash flow statements and review his past business activity.

    His income statement for April shows lower revenue than usual, so he checks back at his cash flow statement for insight.

    Cash Flow Statement 3

    Now, Tex can see what happened. A big chunk online cash flow management his cash flow—$7,000, out of a total cash flow of $13,000—came from Increase in Accounts Payable. Looking back at his transaction records, he sees he hired a bunch of contract workers to run mechanical bulls at a three-day “indoor rodeo” event.

    It seems like the event had mysynchrony login art van cash outflow (contractors) than cash inflow (ticket sales). So maybe next year, when the indoor rodeo comes to town, Tex will lower his expenditures.

    Keeping an eye on accounts receivable

    Tex is still a little obsessed about the cowboy hat incident in September, so he has another look at the cash flow statement.

    Cash Flow Statement 4

    That’s $8,000 tied up in Accounts Receivable—$8,000 Tex didn’t have on hand to buy novelty items for his inventory. Maybe the problem isn’t that Tex has an addiction to glittery cowboy hats—maybe it’s that he didn’t forecast his clients not paying immediately.

    He looks back and checks out Increase in Accounts Receivable for summer, his busy months.

    • August: $7,000

    • July: $3,000

    • June: $8,000

    • May: $9,000

    Except for some especially time-sensitive clients who paid early in July, it seems like Tex spent a lot of his months waiting on money to land in his pocket. Now he knows he should take concrete steps to get paid faster.

    Tracking debt payments

    Tex’s cash flow statement includes the section Cash Flow from Financing, so he can see how much his debt is costing him every month in the form of Notes payable.

    Notes payable for September was $2,000. Looking back to August, July, June, and May, he sees that Notes payable has stayed at a steady $2,000.

    When Tex logs into his online banking, he can see that the minimum monthly payment on his small business loan is $1,500. So he’s only contributing an extra $500 per month to pay down his debt.

    Now, given that business has been good, Tex reckons he should start paying down his loan. He makes an appointment with his accountant so she can help him put together a more accelerated payment plan.

    How to improve your cash flow

    Maybe reading about Tex’s sequined Stetson spending spree brought back tough memories for you. He wasn’t quite at $0 cash flow, but he came close. Has there ever been a time when you went to pay for a business expense but didn’t have the cash to cover it?

    That’s a sign of poor cash flow. It’s also called not having enough liquidity. Luckily, there are steps you can take to increase liquidity and overcome any cash shortfalls.

    Increase revenue

    It sounds almost too simple, but the more money you have coming into your business, the more cash you have on hand to cover expenses.

    Blogs, books, magazine articles, and your next-door neighbor all have ideas to help you make more money. But when you get down to it, there are only four ways to increase revenue.

    1. Increase the number of customers

    2. Increase the amount of the average sale

    3. Increase how often customers buy from you

    4. Raise prices

    So, for instance, instead online cash flow management asking yourself, “How can I increase revenue?” try asking, “How can I get more customers?” When you use these four categories as starting points, the big problem of increasing revenue first premier credit card online broken down into bite-size pieces, and you can start making actionable plans.

    Reduce overhead

    Similarly, spending less on operating activities sounds almost too simple to work. But it does—reducing the cost of goods sold or cost of services (COGS or COS, respectively) will grow your bottom line. That can mean more cash to work with each month.

    How you reduce overhead will depend a lot on your business, but finding less expensive vendors, living with less, buying in bulk, or joining a buying cooperative are all steps in the right direction.

    Further reading:The Small Business Owner’s Guide to Cutting Costs

    Manage your inventory carefully

    The more cash you have fully paid securities lending program ally reddit up in inventory, the less you have on hand to spend, but you need to maintain enough inventory, or else you’ll run out and won’t be able to make sales.

    If you’re experiencing a short-term cash flow problem, consider running a sale. Sales can be used to inject cash into your business now and get rid of a surplus of product, solving two problems at once.

    Inventory management is a fine art, and it can be affected by factors like business growth, your marketing plan, seasonality, and vendor prices. For a crash course, check out our article, Inventory Management 101.

    Match receivables to payables

    You should try to sync up the payments you receive (Accounts Receivable) with the payments you make (Accounts Payable). Remember, if Tex’s clients paid him soon enough, he would have been able to afford those novelty hats.

    Let’s say your monthly loan repayments are due on the 15th. Meanwhile, when you invoice your clients, they have 30 days to pay. And for most of your clients, you send monthly invoices on the 1st of the month.

    So, by the time you have to make a loan payment, online cash flow management still don’t have your revenue for the month on hand—most clients don’t bother paying until the end of the month. As a result, for the second half of the month, cash is tight.

    You can change this. One option is to change the due date on your invoices or start sending them out 30 days before each loan payment is due. Easier would be to call the bank—they’re typically able to change the date your loan payment comes out to one that works for you.

    Speed up your invoice cycle

    We touched on this under matching receivables to payables, but it bears repeating—the sooner you get paid, the sooner you can cover your expenses with cash.

    There are a few ways to do this:

    • Shorter payment terms. For instance, giving your clients 30 days to pay, instead of 60, will get you your money faster.

    • More payment options. It’s possible your clients may also be waiting to get cash in their pockets before they pay you—and that’s slowing them down. Give them the option to pay via credit card, and you could see https compass talent cognizant com receiving payments sooner.

    • Offer incentives for paying earlier. It’s common for contractors to knock two or three percent off an invoice if the client pays in 10 days or less.

    • Invoice factoring.Invoice factoring introduces a third party, called a factor, to the mix. They buy debt off you and give you a portion of the value upfront. You make less, but you get paid faster.

    Further reading:How to Set Up (And Optimize) Your Accounts Receivable Process

    Pay off debts faster

    The more you pay off your debt now, the less you have to pay later in interest. That means less cash coming out of your account every month and lower Notes payable on your cash flow statement. Pay off chunks of debt when you can—during the busy season, or when sales are high, for instance—and you’ll benefit in the long term.

    Before you start making early payments on a loan, check if there are prepayment penalties. Financial institutions have these fees to ensure they make up for the money they’ll no longer make on interest payments. These fees for paying down your debts early can offset any potential savings.

    Sell your assets

    The closer your assets are to being cash, the more liquid they are.

    Take Tex as an example. There’s not much you can trade a mechanical bull for. You definitely can’t use it to repay debts or cover rent. Cash, on the other hand, works in almost every situation.

    If you’re facing a serious cash flow crisis—you aren’t able to pay employees, cover your mortgage, or make debt repayments—you may be forced to sell your assets. It’s good to keep track of which assets you can afford to sell at any one time. Tex, for instance, knows that if things ever get really bad, he can offload one of his vintage mechanical bulls to a buyer on eBay and cover his essential payments.

    Refinance your debt

    Your accountant can help you with this one. If monthly debts are putting pressure on your cash flow, it may be possible to refinance some of your debt.

    An example of this is working with a new lender to take out a small business loan at 10% APR and paying off your 14% APR business credit card debt. It won’t make a huge dent—but it’s one step towards improving monthly cash flow for your business.

    Remember, the first step to managing your cash flow is getting your bookkeeping under control. If you need a good crash course (including options on how to outsource it), check out our Bookkeeping Basics for Entrepreneurs.


    Posted by: | on October 2, 2012
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