The most critical task for the business owner is cash flow managementManagement of cash flow involves being aware of the cash available at any given point and what flows in and out of your companyThat way, you know when there’s a shortfall on the working capital, take necessary measures to ensure optimal amount flowing even for six months.
Many businesses don’t have a full-time accountant; they depend on a visiting one who comes, especially at that time of the year when doing tax returnsThus, no professional is taking care of cash flow management, which is why many of these businesses fail.
Following are some of the ways your accountant can help with cash flow management in your business:
Helps in Preparing Cash Flow Projections
The accountant creates a weekly or monthly cash flow statement that outlines operating expenses, receipts, projected costs of goods, and the amount of cash you haveAccounts payable and receivables rise and fall, and you’re forced to make educated guessesThe professional accountant handles a review of your daily projections, and they’ll be able to advise when there is foreseen trouble and thus help you avoid it.
Keeps Detailed Records
While you record daily expenses and income, the cost of production, and what goes into business, you need to consider an accountantThis is the person who will keep track of your income, expenses, and costsThe professional will tell you the health of your accounts and seal any loopholes that you or your staff may have overlooked.
It Helps You Know Your Customer.
You’ll always have customers who pay you right on time and others that will delay or even buy on creditAccountants can help you decide which, if any, discounts to offer to those who pay on a timely basis and devise a way of incentivizing late payers; you could also introduce a late payment fee to discourage the habit.
Reduce Expenses
Do you know that there’re many expenses that you can avoid in your business? There are things you spend money on that don’t payThe accountants’ team goes through every line item expense and sees the ones that cost your business the mostThe professional will help you reduce such or even eliminate themYou’ll also be forced to cut down on staff, slash marketing budget or make other crucial decisionsWhen doing that, you’ll need the help of an accountantSometimes you’ll need to avoid tying up capital through renting space or leasing equipmentWhen making such decisions, the role of an accountant comes in handy.
Prepare for What-Ifs
Your accountant should tell you if a particular line of credit with a bank makes sense or notWhen your cashflow starts going south, a LOC allows you to borrow moneyThe accountant will give you the exact figure of what you need and ensure you make timely repayments.
Having a professional accountant helping you in running your business is crucial. Learn more and get someone with experience to ensure healthy business cashflow and smooth running of your business.
