Having regular physical check-ups and living a healthy lifestyle can help you prevent and identify health problems early. In the same way, regularly checking your cash flow - your business’s life blood – can help you keep your business free of financial issues.
Research by Preferred CFO shows that poor cash flow is the reason behind more than 80% of small business failures. It not only affects you as a business but also all your SMB clients. As a result, more and more SMB’s are turning to their accountants for business advice. It is therefore vital for accountants to get a solid grasp of cash flow as it will allow you to lead by example and become a trusted adviser to your clients.
In this blog we will discuss some tips that will help you improve you and your clients cash flow.
Make it easier to get paid
In the UK, the average professional services firm is owed £54k in outstanding payments. Making the payments process easier will speed up the time it takes your client’s customers to pay them. The fewer steps they need to take, the more likely they are to pay.
One step to make the payment process easier is through automated cash collections. Advising your clients on using Direct Debits enables them to stay in control of when payments are extracted from their customers’ bank accounts. Whether your clients bill the exact same or different amounts every month, Direct debit allows them to get predictable and timely payments.
Additionally, there are many online invoice tools you can encourage your clients to use. These tools are often included as a standard in major accounting software platforms such as Xero and QuickBooks. They might also include one-click payments which speeds up and simplifies the time it takes customers to pay.
Get proactive with cost management
Another aspect of better cash flow is managing your costs effectively. It is important that you work with your clients to track, review and analyse direct and indirect costs. By having better insight and a detailed plan it will help them balance out their cash flow. A few things you can do to make the costs of your clients more accessible and easier to understand includes:
Coding of all costs and cost centres – By creating specific codes for every cost, expense and business location in your client’s accounting system, it provides them with a better view of their expenses.
Running regular reports on cash flow and expenses – Keeping track of costs and creating regular reports allows you to highlight any areas where spending is too high. From there, you can talk to the client to see if there is something proactive they can do to reduces those costs.
Taking steps to reduce spending with clear actions to help the client manage them – Working closely with clients to streamline their spending processes, cut expenses, lower operational costs and boost overall cash flow.
Technology to help manage cash
Web-based cloud accounting is becoming easier to use and more popular. When it comes to managing cash, easy access to accurate and up-to-date information will provide enormous benefit in helping you monitor cash inflows and outflows. It will help you target when to expect receivables and when to handle your payables.
The Avrium platform is an all-in-one working capital and risk management solution, that helps you with all the issues outlined above. It provides clear insights into your clients’ financial health, highlighting any potential risks that can be controlled in advance. It also enables better client relationships by offering actionable, value-added advisory insights without any need for extra resources.
If you are already a QuickBooks Online or Xero user, Avrium easily integrates with them in one simple step allowing you to extract key transactional information. Once connected, Avrium will provide you with the tools you need to actively assist your client in the management of their working capital cycle – helping you make a real difference to the performance of your clients’ business.
Learn more about how Avrium can help you stand out by giving proactive business advice to your clients in our brochure.