Cash flow is one of the most important tasks to get right for the financial health of any business. With effective cash flow management, companies can create a steady flow of capital to ensure that the essential needs of running an organisation are met.
For 71% of small and medium business owners, cash flow problems are one of the leading causes of concern for their operation. This article will explore how accountants can lend a helping hand to leaders to get the most out of their business through efficient cash flow management.
So, without further ado, let’s get started.
Creating Cash Flow Projections
To run an effective organisation, executives must understand the incoming and outgoing cash flow, including cash receipts, operating expenses, and sales volumes.
Based on an in-depth analysis of past and current movements, accountants can prepare daily, weekly, or monthly cash flow forecasting so business leaders can be more prepared for any what-if scenarios in the future. As we previously explored, effective financial forecasting has several benefits, including risk mitigation and securing external funds.
Identifying Deductible Expenses
Organisations can miss out on a large sum of money if they cannot correctly identify what items they can expense for their business. Accountants have excellent knowledge regarding rules and regulations and can spot any missed opportunities to adjust a company’s cash flow through expensing. Financial partners can also identify any outgoings that can be cut back or replaced by a cheaper alternative to help balance the scales.
Keeping Track of Invoicing
One of the essential parts of cash flow management is invoicing. Accountants can help ensure that invoices are issued on time so payments can be received quickly, reducing crucial delays.
34% of SMEs experience late payments, causing a significant blockage in their regular cash flow, having to chase up customers endlessly. It is critical to note that it is impossible to remove the risk of late payments entirely. Nevertheless, a financial partner can help optimise the invoicing process and manage cash flow so that businesses have enough backup funds to see them through funding gaps.
Optimising Tax Planning
Thorough tax planning can significantly impact your cash flow management if done right. There are countless regulations and filings that SMEs need to stay on top of, including tax returns. Besides making sure that business owners are aware of crucial deadlines, an experienced accountant can also help plan cash flow effectively, calculate long-term tax payments and identify tax relief opportunities.
The Key Takeaway
Running a business is complicated for any leader, and financial pressure can quickly mount up without a healthy cash flow. One in seven SMEs has experienced a crisis in cash flow that left them unable to pay their employees. A well-versed accountant can help organisations to create meaningful profits while maintaining an in-depth financial forecast so businesses can make better choices in the long run.
Sanay is a full-service finance partner ready to help you grow your business to achieve its full potential. Whether it’s cash flow issues or lack of clarity in financial decisions, Sanay’s expert finance team can add immediate value to your business.
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