Your accounting software offers more than a convenient method to track revenue and expenses. It can also be used to improve, manage, and enhance cash flow. Here are a few ideas to inspire you to use your accounting software to increase cash flow monitoring and movement.
Three Tips to Use Accounting Software for Cash Flow Management
A company’s ability to generate benefits for its shareholders, directors, or owners is dependent on its ability to maintain positive cash flow. Cash flow crisis occurs when companies fail to use their accounting software to support cash flow management or neglect vital steps to maintaining adequate cash flow. Here are three tips to help you use your accounting software to support good cash flow management practices.
Tip #1: Send invoices promptly.
Many accounting systems enable users to set up alarms, reminders, or other cues to tackle routine tasks like sending invoices. Without invoices going out, you won’t get any cash in! Sending invoices promptly once the job is complete or the products are shipped is essential to keeping a positive cash flow balance. Take a moment to review your accounting program to see if you can set up alarms or reminders on customer accounts to send invoices out as per their terms.
Tip #2: Process payments promptly, too.
Another source of cash flow problems is failing to process payments promptly. Regular bank deposits keep accounts up to date. Enter payments into the accounting system as soon as they are received. Schedule time to reconcile bank account statements and follow up promptly if the reconciliation is off.
Tips #3: Follow up on overdue bills.
It may feel uncomfortable to contact customers about overdue notices; it is an essential step in cash flow management. Unpaid invoices can create cash flow shortages. Follow up with clients about unpaid invoices and discuss payment terms for chronic late-payers.
Negotiate Payment Terms
Another step you can take to manage cash flow is to negotiate longer terms with your suppliers. Use your accounting software to determine the average terms you have with your current suppliers: Net 15, Net 30, Net 60, etc. Is this adequate? Would longer payment terms ease times of cash flow strain?
Don’t hesitate to pick up the phone and call suppliers and vendors, especially those with whom you have had a long-term business relationship. Many are more than willing to extend the courtesy of longer payment terms to a good customer.
Establish Lines of Credit
Additional steps you can take to ensure proper cash flow management and prevent a cash crisis are establishing lines of credit with lenders before you need to tap into them.
Remain on good terms with lenders and discuss any impending cash flow needs with them. Monitoring your cash flow regularly using accounting software can help you prevent many problems, but even the best-managed accounts experience cash crunches. If you do need a loan, having a positive relationship with lenders and a ready line of credit will be a big help.
Sage 100 Accounting Software
Sage 100 offers accounting software in a robust package. With enhanced features and the ability to scale as your company grows, you’ll find yourself turning time and again to the accounting modules in Sage 100 to manage cash flow and more.
Emerald TC provides software and consulting for manufacturing companies. We can help you choose the right ERP system for your needs and offer Sage and other software packages for every type and size manufacturing company. Contact us or call 678-456-6919 for more information.