10 Ways Bookkeepers Can Improve Cash Flow - dummies

By Jane E. Kelly

Wouldn’t it be nice to be able to check your bank account knowing that you were going to see a nice positive cash balance. What can you do to make this a reality? Start bringing in the cash on a regular basis. . .

  • Analyse your debtors

    Be sure to review your Aged Debtors (that is, those customers who have received goods and been invoiced, but have not yet paid) on a regular basis and adopt a regular debt-chasing routine. It’s possible that some customers who’ve not paid yet need just a little nudge to persuade them to bring out their cheque books out and pay you.

  • Invoice quickly and send out via email

    Follow the invoice with a statement via email (for speed) and then follow this up with a phone call, in which you ask politely when the bill will be paid.

  • Invoice accurately

    Errors on invoices may delay payment.

  • Offer a discount

    Encourage early payment by offering a discount.

  • Make it really easy for people to pay you

    Include all the possible payment options on the face of your invoice. Include bank details and encourage customers to pay by bank transfer. This not only speeds up the cash coming into the business but also can save on bank charges, as businesses are charged by the amount of cash/cheques that are deposited in their bank account and much less on bank transfers. If customers are likely to send a cheque, state clearly the address to which your customers should send the payment.

  • Maintain a cash flow spreadsheet on your computer

    Keep this spreadsheet up to date with forecasted incoming cash flow and outgoing expenses. This helps in focusing your mind on the current bank balance. Make sure that you review your Aged Debtors to see who owes you money; also review your Aged Creditors, to work out when your suppliers need to be paid.

  • Review your stock

    A lot of money could be tied up in stock. Review stock levels to ensure that you have adequate stock for operational purposes, but then make sure that you begin to liquidate the remainder of the stock levels and get some cash coming into the business.

  • Review your payments

    You might find it easier to spread your cash flow by paying for some things on a monthly basis. Doing so smoothes out the cash flow and prevents any large chunks of cash being paid out when you least expect it. It may be more expensive to make payments in this way, but it is a lot easier to predict your cash flow and if this means ultimately keeping your bank account in credit then you are avoiding paying expensive bank charges.

  • Regularly reconcile your bank accounts

  • Taking this step means that you can accurately produce Aged Debtors and Aged Creditors reports, avoiding any future queries or discussions over whether you have paid or received monies.

  • Maintain good relations with suppliers

    By paying your suppliers regularly and on time you ensure healthy relationships, which are key when relying on your suppliers to provide stock on time and in good condition. You may be able to secure a discount for prompt or early payment of goods. Every little helps towards improving the cash flow of your business.