The most critical task for the business owner is cash flow management. Management of cash flow involves being aware of the cash available at any given point and what flows in and out of your company. That 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 returns. Thus, 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 have. Accounts payable and receivables rise and fall, and you’re forced to make educated guesses. The 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 accountant. This is the person who will keep track of your income, expenses, and costs. The 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 credit. Accountants 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.
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 pay. The accountants’ team goes through every line item expense and sees the ones that cost your business the most. The professional will help you reduce such or even eliminate them. You’ll also be forced to cut down on staff, slash marketing budget or make other crucial decisions. When doing that, you’ll need the help of an accountant. Sometimes you’ll need to avoid tying up capital through renting space or leasing equipment. When 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 not. When your cashflow starts going south, a LOC allows you to borrow money. The 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.