What You Risk by Not Tracking Your Cash Flow

Imagine being able to pick a date in the future that matters to you, because that is when wages are due or a loan repayment falls, and being able to see exactly how much money you will have in the account that day…

In business, a great many factors can decide whether your company succeeds or fails. One of them is tracking cash flow — or, put simply, tracking the money coming into and going out of your company.

Tracking cash flow can also show you:

• The balance on every account
• The balance in your cash floats
• The 10 largest clients whose payment terms fall due in the next 10 days
• The 10 largest clients whose payment terms have already expired
• Expected retail revenue (based on an analysis of sales in the same period last year)
• The 10 largest suppliers whose terms have expired or fall due in the next 10 days
• The value of wages
• The value of VAT (depending on the date you are looking at)

If you had all of this information…

How differently would you run your business? Would you make different decisions? Would you be under less pressure knowing all this far enough ahead that there was room and time to act on it?

At the end of this article we will explain how all of this is possible, and how tracking cash flow can be simple when you and your accountant use the same software.

Before we get there, though, let us look more closely at why tracking cash flow matters.

Why does tracking cash flow matter, and what do small and medium companies gain from it?

Tracking cash flow means tracking every financial transaction in your company, including revenue, expenditure, debts and collections. If you track your cash flow from up-to-date accounting figures, you can forecast what your account balance will be on a given date in the future. That gives you:

1. Better liquidity management

Tracking cash flow helps you know how much money you have available at any given moment. That means you can make informed decisions about how to spend, when to pay bills, and when to invest in growth. Better liquidity management means being able to avoid short-term financial trouble.

Benefit: Avoid unnecessary interest and penalties

With timely information you avoid unnecessary interest on borrowed money and penalties for late payment. That contributes directly to the company's financial stability.

2. Paying your obligations on time

By tracking cash flow you can make sure you always have enough to pay bills on time, pay your staff and meet your other obligations. That helps you maintain good relationships with suppliers and avoid late payments, which can mean lower costs and better business relationships.

Benefit: Reduce financial stress

Beyond the benefits mentioned, tracking cash flow helps you see financial challenges coming and prepare for them. When you have control over your finances, you reduce the stress and worry about how you will pay the bills or settle your debts.

3. Spotting problems

Tracking cash flow helps you spot problems or irregularities in the business. If you notice money being spent quickly on a particular category of expenditure, for instance, that may point to a need to optimise those costs or consider alternatives. It lets you react before problems get worse.

Benefit: Make the business more efficient

Analyse the information to identify areas where you can be more efficient. That includes optimising costs, reducing losses and increasing productivity.

4. Planning ahead

Tracking cash flow lets you plan your company's future better. From historical cash flow data you can anticipate seasonal fluctuations and plan strategies for growth and development. It also makes decisions about investment and expansion easier.

Benefit: Make better decisions and negotiate from a stronger position Without cash flow information, decision-making becomes pure guesswork, which can lead to expensive mistakes.

== When you have accurate information about your financial position, you are in a stronger position to negotiate with banks, investors or prospective partners. That can make access to capital for growth easier.

== So we have established that tracking cash flow lets you make smarter decisions, feel less pressure, negotiate from a stronger position, avoid interest and penalties, and run a more efficient business. The practice allows better financial management, reduces risk, and creates the foundation for sustainable growth and success. Whatever the size of your company, investing in cash flow tracking will pay off over the long term, leaving you financially more secure and more competitive in the market.

Now we come to the part we promised you at the start:

How can you receive cash flow reports automatically by email on particular dates?

When you and your accountant use the same software, your accountant sees every invoice and financial document sooner and can post them promptly. On the basis of that up-to-date posting, an accountant using the digital accountant platform — which is built on the powerful TiramisuERP software — produces automatic reports and forecasts your cash flow.

When all the information is in one place, the software does all the calculations for you. No more spreadsheets and no more processing figures by hand.

Ten days before the 1st and the 15th of each month, based on your accounting figures, your inbox will show you reports and information on:

• The balance on every account
• The balance in your cash floats
• The 10 largest clients whose payment terms fall due in the next 10 days
• The 10 largest clients whose payment terms have already expired
• Expected retail revenue (based on an analysis of sales in the same period last year)
• The 10 largest suppliers whose terms have expired or fall due in the next 10 days
• The value of wages
• The value of VAT (depending on the date you are looking at)

If you would like this to be your reality — to feel less pressure, digitise your business and make decisions from up-to-date figures — get in touch by email at info@tiramisuerp.com or by phone on 19939.