Tips for Creating a Smoother Cash Flow
- By Lauri Paxton
- 10 Apr, 2014
Money in and out of your business is like a continuous ebb and flow. But sometimes the tricky little things crop up that can cause the ebb and flow to stop. The stress from ensuring you have enough cash for payroll, bills and yes taxes can be overwhelming. Here are some tips to keep the river of cash flowing freely.
Tip #1: Go Digital
Online banking is an efficient way to pay bills. It saves time, postage, office supplies and check stock. Bills are paid directly from your bank account.
The Intuit Payment Network (IPN) is an option when it comes to sending and receiving money. It’s free to set up your account, and it’s also free for your receiver to set up an account. All you do is add your bank account, and you can transfer funds between the two accounts just by knowing the receiver’s email address. Cost for the receiver is $.50 per transaction.
PayPal is the third digital option. The fees vary, and are usually paid by the receiver.
Tip #2: Intermingling of Funds
Open a separate bank account and credit card account to be used for business only. When it comes to finances, it’s never a good idea to mix business and personal accounts, especially when it’s coming out of the same bank account.
If you’re comfortable with credit cards and you can maintain control of your spending, it saves accounts-payable time when you can charge everything you spend on business to your credit card as long as you pay it off every month. Using your card is faster at checkout than writing a check these days, so you’ll save time on errands as well. Choosing a card with cash back or points toward purchases allows the added benefit of gift cards or promotional gifts that can be used for employee perks or client thank yous.
Autopay can be a great option for recurring expenses such as rent, utilities, or insurance. You can also be more accurate with the timing of the payment which will allow you to keep your money in the account for as long as possible until the due date arrives.
Tip #4: Verify Expenses
Time is of the essence when expenses come to verifying what you purchased is actually what is listed on the invoice. If employees have company credit cards, verifying those statements quickly will alert you to improper spending and/or budgeting. We hope you never pay bills that aren’t yours, but it can happen.
A three-way matching process on all your payables, especially those related to inventory as it refers to the three documents involved in accounts payable: purchase order, packing slip, and the invoice. These documents should match exactly to ensure your order and bill matches and you don’t pay for out-of-stock items that didn’t ship.
These are four ways you can improve office procedure efficiency and save time on accounts payable processing. For more tips on accounting efficiencies, give us a call.