Bookkeeping tip: Check cash flow BEFORE crisis hits!

Life is full of surprises, but the fewer we have in business, the better. Cash flow is the lifeblood of your small business. It determines the financial health and well being of your business and can spell the end if you don’t have a handle on it.

It’s important to have up-to-date visibility of your cash flow with daily reports and cash flow projections for the next three months. These will alert you to any mismatches between cash flowing in and more importantly, the cash flowing out.

A solid understanding of where your cash flow is at any given time will allow you to finance new projects, help you avoid making emergency appeals to your bank manager, or offering customers big discounts to pay you early.

Are you reconciling regularly?

As a rule of thumb you should be regularly (at least monthly) reconciling your bank accounts. Any earnings or income received from customers should be receipted and banked.

Staying on top of your cash flow can help you find issues such as where payments may have gone astray or any discrepancies in bank charges and interest (remember banks make mistakes too!). Monitoring bank balances can help you avoid interest or penalties.

Have you factored your current GST liability and super contributions into your cash flow?

Are your drawings from the business impacting cash flow and impeding the business?

Are they sustainable?

Do you have separate business and personal bank accounts?

These are all things a professional bookkeeper can help you with. A bookkeeper can do regular bank reconciliations and cash forecasts so you’ll not only know your day-to-day cash position but you’ll be able to plan for contingencies. You’ll get your debtors’ statements out early so cash can come in faster. You’ll be able to take advantage of supplier discounts and minimise bank fees and charges.

If you’re struggling to come to grips with your cash flow, no matter how big or small your business, we can help.

Give us a call today for a free no obligation bookkeeping analysis. We can set you up and give you training on your bookkeeping software, catch up with you on a monthly basis or fly in and help you as a once off to get things sorted.

Email us today and get back to the business you love.

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