How CFO Services can Improve Your Cash Management

For small business owners, cash flow problems are a common and dangerous threat to the survival of their companies. Start-up businesses often find themselves short of cash right off the mark. Cash is the single most important element of survival for a small business, however, small businesses often say that an inability to control cash is their biggest problem. Professionals such as outsourced CFO services have a deep understanding of cash management and may be the answer to your small business’s cash flow crisis.

Cash flow is money flowing in and out of a business. It is usually measured over set periods of time such as monthly, quarterly or annually. A business is considered to have cash flow problems if they are spending more money than they are making in a given period of time.

There are times when a business might suffer from a cash flow reduction, such as when it purchases new equipment or if there was a catastrophic event and the company had to close for a period of time. But if a business is constantly struggling with its bottom line, this could create long-term problems from which it might not recover.

Businesses will generally not achieve financial control and positive cash flow right from the get-go, nor does it often happen overnight. The journey to achieving positive cash flow could be made difficult because your businesses may lack the means to manage cash flow using proper strategies and expertise.

Outsourced CFO services give small businesses the expertise they need to manage cash flow at a fraction of the cost. If your small business is experiencing a cash crisis, outsourced CFO services could be your solution. Here is how they can help:

1.Track Everything and Keep Your Data Accessible

Tracking invoices can help eliminate errors and duplicate payments. In fact, a survey recently found that small businesses receive an average of six duplicate invoices totaling more than $12,000 each month. When your outsourced CFO is responsible for tracking each invoice diligently, your small business will be sure to avoid mistakes, missed payments, or duplicate ones. Additionally, your outsourced CFO will keep all of the data in one location which will help the whole team be on the same page.

2. Implement Mobile Payment Systems

One way to speed up payment from customers is to offer mobile payment solutions. This is especially good if you sell products or offers services at your customer’s’ home or office. You can forget about invoices and instead get paid right on the spot with mobile apps that can use a phone or tablet to swipe credit and debit cards. An outsourced CFO has the ability to set a mobile payment system up for your small business and will ensure to track and monitor it weekly.

3. Find Expense Savings

It’s important to recognize when cost cuts are necessary, and how to effectively make them. Business owners must be quick to respond when expense cuts are necessary. Any delay in making expense cuts will cause a cash crunch. Outsourced CFO services are qualified to identify and effectively cut costs to help your small business generate some cash. Additionally, when expense savings includes downsizing staff, it’s important the company seek qualified help to comply with local and federal employment laws.

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4. Be Active in Forecasting Your Results

Small business owners use forecasting to help them properly manage the cash of a business. Outsourced CFO services can identify financial trends using digital tools, and you could have a clear picture of where your company stands in the market. All of this can lead to better decision making, which could impact your cash flow in a positive way.

5. Offer Discount for Quick Payment

One option for increasing cash flow is to offer your customers discounts if they pay early. While this practice may impact your profit margin, it may help your management of cash flow by incentivizing customers to make payments earlier than billing cycles typically require. Your company may also take advantage of this with suppliers and others that you owe.

6. Using Technology to Create a Lean Business

Technology allows businesses to operate ‘lean’ and to keep their expenses as low as possible. Outsourced CFO services can analyze each operational process within your business and determine exactly how much it costs your business each month. They can provide technological solutions that allow you to perform these tasks cheaper, and implement them as quickly as possible!

7. Know What You Expect the Cash Balance to be Six Months from Now.

What do you expect your cash balance to be six months from now? This question really gets to the heart of whether you are managing your business or whether your business is managing you. Do you have a financial plan with long-range cash flow projections? Outsourced CFO services can help you develop and create forecasting projections to ensure your business has a long-term plan for cash flow.

8. Eliminate Obsolete Inventory

Spending excess amount of cash on inventory purchase is the biggest mistake companies can make across all industries. Keeping inventory levels low allows for maximum cash flow, while still enabling the business to operate normally. Outsourced CFO services can assist in effective sales forecasting which will aid in making reasonable inventory purchases to improve cash flow.

9. Prepare Cash Flow Projections

Cash flow projections are as important as sales projections, company-wide financial forecasts, and broader industry insights. Cash flow projections address the question of whether cash will be available to fund the business’s continued growth and help to identify potential shortcomings. One key item to remember: cash projections almost never matches revenue projections.

10.  Get business credit cards to cushion your cash flow.

Look for cards with rewards such as points you can use toward travel or business purchases. In addition to providing a cushion for lean times, business credit cards also categorize your purchases, so it’s easier to track expenses.

Limitless Investment and Capital’s Outsourced CFO Services

Staying on top of your cash flow is key to your business success. Limitless Investment and Capital’s outsourced CFO services for small businesses can help owners make cash flow-centric decisions. Our experts are seasoned industry veterans that have the expertise needed to create positive cash flow in your organization while building its future. Let’s get started TODAY!