Are you feeling cash-strapped? If so, it may be time to implement some business accounting strategies that will allow you to get cash into your pockets sooner. The problem is that many small businesses don’t have the cash on hand in order to make these changes because they are struggling with cash flow issues. In this blog post, we’ll discuss 3 accounting strategies for small businesses that will help increase cash flow and improve financial health.
- Cash-basis Accounting
The first accounting strategy that will help cash flow is cash-basis accounting. This type of accounting means tracking cash that enters and leaves your company, rather than the more tedious accrual method most small businesses use to track income and expenses. Cash-basis accounting will help you better understand when cash needs to be replenished because it gives a clear picture of how much cash has been received or spent at any given time.
- Budgeting with Emergency Fund
Another strategy for improving cash flow is budgeting with an emergency fund in mind. When times are good, adding money into a savings account can be difficult but if your business fails during tough times then having this buffer available could save the day! If there’s anything we’ve learned from previous recessions it’s that while no one likes going through hard economic crises, everybody likes to stay on top and survive! So, it’s best to be prepared.
- Cash flow forecast
A cash flow forecast is the last strategy for improving cash flow and a fundamental requirement of any business owner, which includes projecting cash inflows in order to make sure that they can cover cash outflows throughout the year. Projecting cash flows takes into account historical averages as well as current trends in an effort to predict future earnings or expenses so it’s important not only today but also tomorrow. If you’re already seeing cash flow problems then this process will help you identify where those are coming from and what steps need to be taken together with your team right away!
In conclusion, there are many different methods for addressing cash needs at every stage of growth- whether new financing is needed, taxes aren’t being paid on time, or any other financial need.
