The number one challenge for small businesses is managing cash flow. With the silly season here, Vend CEO Vaughan Rowsell offers his tips to ensure retailers get paid faster and won’t be forgotten at this busy time of year.
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Embrace online accounting tools
Online accounting tools such as Xero are an excellent way to manage cash flow. Systems can be configured to send alerts when outgoing payments are due, automatically invoice customers, and check if payments have been made. They can create and update cash flow forecasts based on real-time figures from daily bank feeds.
One of the most effective ways for small business owners to manage cash flow is to spend a few minutes on financials each day. Accessing your accounting system from a mobile device means you can be on top of your cash flow, anywhere, anytime. By having bank transactions uploaded automatically into your accounting system, you can perform bank reconciliations daily, providing you with a real-time view of your cash flow.
Talk to your suppliers
Supplier relationships, as with customer relationships, can often be very beneficial when it comes to cash flow. Some suppliers offer early payment discounts, which can save you a lot of money.
In leaner times, it’s also worth having the discussion with your suppliers about payment terms or a short-term credit extension. Large firms such as utility companies are unlikely to be flexible, but you may be surprised at how open your long-term suppliers can be to renegotiating terms – providing you give them advance notice.
Using affordable cloud-based point of sale software to process sales, track inventory and manage customers can also help improve cash flow. Many solution providers offer software that works easily on any device or platform, including iPads or existing POS hardware.
You can build and manage contact lists and gain a full history of your customers’ purchases and preferences. This can easily be integrated into your online accounting software, enabling you to track payments easily and chase outstanding invoices. Ordering also becomes more concise with up-to-the-minute reporting. As customers’ spending habits and product turnover rates are easy to monitor, you run less risk of tying up cash flow in redundant inventory.
Develop regular processes
Accurate cash flow depends on having the right information. It’s worthwhile developing good habits, or even a formal process, around inputting your company’s financial data such as bills, invoices and relevant due dates. Include this information in your daily accounts housekeeping. Review your accounts receivables process. Make sure that you are invoicing in a timely manner and follow up on overdue accounts.
Make it easier for customers to pay
Customers no longer need cash or even a card these days to purchase goods and services. PayPal launched their new cashless technology only a few weeks ago in Australia and already various retail businesses are trialling this technology in their stores and businesses. Make it easy for your customers to pay electronically—by BPAY, direct debit, funds transfer or card.
Through a combination of clearer processes and the use of new technology, small businesses can manage cash flow simply and more effectively – even in the rush of the Christmas trading period.
Have a tip you’d like to share? Email email@example.com ^TB
About Tara Benedict
A former retailer (and unabashed nerd) who daydreamed about integrated POS software, Tara now delightedly recruits, promotes, and enables Vend's wonderful channel of add-ons and partners. An ardent sharer of Vend news and events, connect with Tara on Twitter, LinkedIn or Google+ and never miss an opportunity to meet up with the affable Vend team.