September 26, 2017
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On December 22, 2017, The Tax Cuts and Jobs Act was signed into law. The information in this article predates the tax reform legislation and may not apply to tax returns starting in the 2018 tax year. You may wish to speak to your tax advisor about the latest tax law. This publication is provided for your convenience and does not constitute legal advice. This publication is protected by copyright.
We've discussed at length in the past about how
cash flow
is ultimately one of the most important factors of a business that far too many people just aren't paying enough attention to. Cash flow maintenance is about more than just knowing how much money is coming in versus how much money is going out. Even if your business is very close to true profitability, this ultimately won't mean a thing if you're dealing with clients who are slow to pay. This can seriously impact your momentum, and worse — your chances at long-term success.
To put it simply, enhancing your cash flow isn't just about enhancing your accounting — it's also about enhancing the very organization you've already worked so hard to build. With that in mind, there are a few key tips you'll absolutely need to know about moving forward.
Technology Is Your Friend. It's Time to Start Acting Like It
Perhaps the most important tip that you should start using to enhance your cash flow (and thus, your entire business) is to start leveraging the power of modern technology to your advantage. There are a wide range of different financial solutions that allow you to not only submit invoices to clients electronically, but that then allow those clients to pay you in exactly the same way.
Not only will this make it far, far easier for you to track money that is still "in play" so to speak, but it will also significantly help shorten the time it takes to get you paid for your products and services in the first place. This means that money will be coming in at a much faster rate, helping to make sure that you have the cash on hand necessary to take advantage of certain opportunities as they develop.
Use Your Credit Cards in the Right Ways
Another key tip that you can use to enhance your cash flow actually involves using your company credit card for purchases that you may otherwise pay for by check. Using your company credit card gives you an extra grace period to pay off the card in full each month. This essentially allows you to "push" that cash payment down the road, giving you a bit more breathing room than you'd have rather than the net 15 or net 30 that you'd be dealing with for check-based payments.
Get Organized and Stay That Way
Perhaps the most important step that entrepreneurs can take to enhance their cash flow involves not just getting organized, but doing anything that they have to in order to stay that way as long as possible. Consider creating different types of tier groups in your records, clearly separating people based on when they absolutely need to be paid.
Order everyone by who must be paid first — meaning that you're definitely going to want to prioritize the government, payroll and certain vendors that may shut off your access to resources before anyone else. Certain others, on the other hand, can easily be paid later without too much undo fuss. Sure, you'd love to be able to pay everyone at the same time — but in the event that you can't, this information will be invaluable to have when making strategic decisions regarding where your available funds should go.
This itself can also help identify certain trends and patterns that make the next six, 12 and 24 months of essential decisions far easier to predict.
Never Be Afraid to Consult a Professional
At the end of the day, the most important tip that you need to not just understand but truly believe in with regards to cash flow is that you should never be afraid to enlist the help of a trained professional. You're a business leader and you're good at what you do. You wouldn't have gotten this far if you weren't.
However, that doesn't make you a financial expert and it certainly doesn't mean that you'll have the time necessary in a day to devote to something as mission-critical as proper bookkeeping and other financial tasks. In certain cases you might, sure — but if you start to feel like this is getting overwhelming, it is in your own best interest to pick up the phone and find someone who can lend you a much-needed helping hand. Find an accounting expert who doesn't just have experience in terms of cash flow, but who understands your niche and knows exactly how a business just like yours needs to perform.
Not only will this help put you in a better position to make positive cash flow gains moving forward, but it'll also give you the essential peace of mind that only comes with knowing your financial needs are being properly (and actively) taken care of.
To put it simply, enhancing your cash flow isn't just about enhancing your accounting — it's also about enhancing the very organization you've already worked so hard to build. With that in mind, there are a few key tips you'll absolutely need to know about moving forward.
Technology Is Your Friend. It's Time to Start Acting Like It
Perhaps the most important tip that you should start using to enhance your cash flow (and thus, your entire business) is to start leveraging the power of modern technology to your advantage. There are a wide range of different financial solutions that allow you to not only submit invoices to clients electronically, but that then allow those clients to pay you in exactly the same way.
Not only will this make it far, far easier for you to track money that is still "in play" so to speak, but it will also significantly help shorten the time it takes to get you paid for your products and services in the first place. This means that money will be coming in at a much faster rate, helping to make sure that you have the cash on hand necessary to take advantage of certain opportunities as they develop.
Use Your Credit Cards in the Right Ways
Another key tip that you can use to enhance your cash flow actually involves using your company credit card for purchases that you may otherwise pay for by check. Using your company credit card gives you an extra grace period to pay off the card in full each month. This essentially allows you to "push" that cash payment down the road, giving you a bit more breathing room than you'd have rather than the net 15 or net 30 that you'd be dealing with for check-based payments.
Get Organized and Stay That Way
Perhaps the most important step that entrepreneurs can take to enhance their cash flow involves not just getting organized, but doing anything that they have to in order to stay that way as long as possible. Consider creating different types of tier groups in your records, clearly separating people based on when they absolutely need to be paid.
Order everyone by who must be paid first — meaning that you're definitely going to want to prioritize the government, payroll and certain vendors that may shut off your access to resources before anyone else. Certain others, on the other hand, can easily be paid later without too much undo fuss. Sure, you'd love to be able to pay everyone at the same time — but in the event that you can't, this information will be invaluable to have when making strategic decisions regarding where your available funds should go.
This itself can also help identify certain trends and patterns that make the next six, 12 and 24 months of essential decisions far easier to predict.
Never Be Afraid to Consult a Professional
At the end of the day, the most important tip that you need to not just understand but truly believe in with regards to cash flow is that you should never be afraid to enlist the help of a trained professional. You're a business leader and you're good at what you do. You wouldn't have gotten this far if you weren't.
However, that doesn't make you a financial expert and it certainly doesn't mean that you'll have the time necessary in a day to devote to something as mission-critical as proper bookkeeping and other financial tasks. In certain cases you might, sure — but if you start to feel like this is getting overwhelming, it is in your own best interest to pick up the phone and find someone who can lend you a much-needed helping hand. Find an accounting expert who doesn't just have experience in terms of cash flow, but who understands your niche and knows exactly how a business just like yours needs to perform.
Not only will this help put you in a better position to make positive cash flow gains moving forward, but it'll also give you the essential peace of mind that only comes with knowing your financial needs are being properly (and actively) taken care of.
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