Simple Things Small Business Can Do to Manage Cash Flow
Small business owners should be managing or tracking their business’s cash flow on a regular basis. Sometimes the task can seem too daunting or time-consuming. Matthew Fargo, CPA and writer for American Express, offers four simple steps to help small businesses get a handle on revenue and spending.
Published on APRIL 10, 2015 at http://ow.ly/MnPOY
1. Hire an outsourced CFO or bookkeeper.
Entrepreneurs should be focused on growing the business, so trying to take care of your bookkeeping is generally not time well spent. Hiring a professional to take care of your books ensures that accounting is done correctly the first time, proper processes are put in place for growth and timely financial statements are available for planning and analysis. Review financials on a regular basis to ensure whoever you’re working with has a handle on operations. If you’re not comfortable reviewing financial statements or don’t understand basic accounting, sit down with your accounting team and get a crash course.
2. Use apps.
Quickbooks and Xero are small business accounting options.
3. Focus on key performance indicators (KPIs).
KPIs vary based on the business. KPIs at a startup are very different than for an established business. At a startup, many operational KPIs surround building your product and attracting customers. After a financing round, you might have 12 to 18 months of cash, so you need to know what your budget is. You also have to set limits on how much you spend and monitor it constantly. If you run a professional services business, a KPI might be the total number of hours you spend doing work for a client compared with the hours you bill them for.
4. Hold regular meetings.
Have weekly and monthly management meetings to look at financial reports for performance indicators. Meetings are just as critical for an early-stage company monitoring how much money is going out as they are for a big company figuring out how much revenue is coming in.”