Your organisation’s cash flow is the lifeblood of your business. And if you don’t have an accurate picture of the money being transferred in and out of your bank accounts, it’s impossible to properly reconcile bank statements or forecast your success. Good bookkeeping makes it possible to increase cash flow.
You might think online bookkeeping is just about tracking what you spend, but it is just as vital to track accounts receivable and catch unpaid invoices before they become bad debts. If you don’t have the budget for a full-time bookkeeper, the good news is you may not need one. Virtual bookkeeping helps you send your cash flow in the right direction without costing a fortune.
Ways virtual bookkeeping helps to boost cash flow
Good bookkeeping practices always benefit your business. Virtual bookkeeping services have some unique benefits. Here are three ways that finding a trustworthy virtual bookkeeping service can help you increase cash flow.
Better accounts receivable and accounts payable management
First and foremost, a virtual bookkeeping service allows you to track your accounts payable (the money you owe to other people and businesses) and accounts receivable (money that is rightfully owed to you). These two processes combine to create your cash flow.
When you have improved management of your invoices and bills, there is a positive impact on cash flow management. Once your books are in good shape, you can strategise ways to:
- Make it easier for clients to pay. An expert bookkeeper can implement new payment systems that allow for faster payments and payment reminders.
- Stay on top of late payers. Are you able to efficiently see all outstanding debts? Virtual bookkeepers can track your accounts receivable and create regular, reliable reports.
- Accurately report accounts payable. Your virtual bookkeeper can also create new systems to help ensure the cash flowing out is always paid on time. This helps you avoid penalties, late fees, and other unnecessary charges that increase cash flow.
- Encourage clients to pay on time. Would discounts incentivise your customers or clients to make prompt payments? Faster payments can mean more reliable cash flow, so they might be worth it.
- Reconcile bank accounts more regularly. Some businesses only reconcile their statements quarterly. But monthly bank account reconciliation allows you to catch errors, missed payments, and other inconsistencies sooner.
- Spread out long-term payments. A good bookkeeper can tell you whether you should have an aggressive pay-off strategy for your debts or stretch them out to improve immediate cash flow.
- Finding smart investments. Use your increased cash flow to invest wisely, and you may be able to pay off debts sooner than planned without liquidating other assets.
Cut costs on staffing
Using virtual bookkeeping can also help you save money on staffing needs. Instead of hiring an in-house bookkeeper to be in your back office, you can hire a virtual bookkeeping team that grows with you as needed. You’re unlikely to overspend on staffing needs this way, which can keep your cash flow in the black.
Using a virtual bookkeeping service to help manage your cash flow enables you to:
- Pay for only the bookkeeping hours you need. You won’t end up with a staff member in the back office who is paid for more hours than necessary. When you’re not spending extra on managing your books, your books start to look better.
- Scale up and down as needed. You can add more members to a virtual bookkeeping team as needed, then scale back down as necessary. You can even be paired with experts in your particular industry who know when you need more and less help.
- Avoid sacrificing quality bookkeeping just to save money. Some methods of avoiding a full-time staff member can cause mistakes to be made or create gaps in your records. For instance, if you try to do your books as an executive, you probably won’t have time to do it right. A virtual team means good bookkeeping and savings.
Use your time to grow your business
Virtual bookkeeping also helps you increase cash flow by freeing up time to grow your business. When your bookkeeping team is on top of reports, you have newfound time to market your business, create new revenue streams, and have executives focus on big picture money making. Ultimately, more free time for the people who know your business best is likely to lead to more ideas and improved finances.
Visory helps businesses increase available cash flow without overspending on overheads. Our advisers can connect you with industry expertise and help increase cash flow by cutting costs, managing payables, and recommending smart investments. If you want to learn more, check out our free financial health check here. A Visory Success Manager will analyse your business’ financials and identify areas where your back-office processes could be improved. If nothing else, it’s an opportunity to think through ideas for your business, and we can leave it at that.