Cash flow consists of the flow of funds into and out of your business. It’s crucial to understand what cash flow is and how to keep track of it — especially for small businesses that may not have huge cash reserves. Simply put, if you don’t pay attention to your cash flow, you may find yourself without the money to pay your bills.
Monitoring cash flow means not only looking at past performance but also at projections of what your cash flow will be in the future. This allows you to make decisions that can help your business veer away from red ink and stay firmly in the black. And this, in turn, helps your business run much more smoothly — and stay ready for bigger opportunities you can’t take advantage of if you’re struggling just to keep up.
Each business has unique patterns of cash flow, but there are a variety of tools available to help all kinds of businesses track and manage this important aspect of their finances. Here are some options.
Float focuses on generating cash-flow forecasts for businesses that use Quickbooks, Xero, and FreeAgent. Float automatically updates using data from one of these accounting platforms to create cash flow forecasts, saving you the trouble of manually entering the required information.
As opposed to most accounting programs that show you the details of past financial performance, float allows you to see where your bank balance is headed in the future. Float lets you to set budgets, details cash inflows and outflows, shows you what bills and invoices are due and predicts how these will affect your bank balance. Float’s graphs can show you if you’re headed into the red and help you to model payment dates and create a plan to stay in the black. You can also use Float to create scenarios that model your short- and long-term cash flow.
Pulse allows small businesses to monitor cash flow (on a daily, weekly or monthly basis), forecast cash flow and generate visual reports so you can quickly see how everything looks. You can also use Pulse to see the impact that a new project, client or expense will have on your cash flow. If you do business internationally, you’ll appreciate that Pulse tracks cash flow and runs reports in multiple currencies.
If you use Quickbooks Online, you can connect it to your Pulse account to check the accuracy of your projections. You can also offer various levels of access to Pulse for coworkers, partners and investors to keep everyone updated at the level you’re comfortable with.
DryRun is cash flow forecast software that allows you to track invoices, bills and due dates so you can see who owes you what, when it will come in, when your bills are due and whether you’ll have the cash to pay them. DryRun lets you track late and partial payments, and you can sync data on bills, invoices and payments from QuickBooks Online and Xero to streamline the process.
DryRun also lets you analyze your cash flow situation and create multiple “what-if” scenarios with various data points to compare outcomes. The program can also track partial payments, and its collaboration features let you share forecasts with colleagues and stakeholders using read-only or read-and-write access.
The software’s budgeting feature also gives you the option of defining your own categories and creating auto-repeating budget items that you can view in varying levels of detail.
PlanGuru offers cash-flow forecasts, budgeting, financial analytics and strategic planning tools for small businesses. They provide more than 20 forecasting methods that allow you to project models for up to 10 years. Its planning function lets you look at “what if” scenarios, so you can see how specific events might affect your cash flow and understand the full implications of decisions on your business’ profitability and cash.
With PlanGuru, you can import data from Excel, QuickBooks and QuickBooks Online. Its budgeting feature lets you create the type of budget that is right for your business, from a simple high-level small business budget to a detailed multi-department operating budget. Its analytics tool also helps you keep stakeholders in the loop.
The desktop version of Quickbooks offers simple cash flow management tools that can be useful if your small businesses doesn’t need all the bells and whistles. If you already use Quickbooks for your business and your cash flow management needs aren’t too complicated, this could be a good choice.
Quickbooks offers two ways to track the cash flow of your business: cash flow forecasts and the Quickbooks Cash Flow Projector tool.
The cash flow forecast feature uses data from your receivables, payables and bank accounts to show you what your cash flow looks like for up to a month ahead. The Cash Flow Projector allows you to manually input data including your starting cash balance, predicted cash receipts and business expenses to get a view of the next six weeks of your company’s cash flow. Its preview feature helps you see how your projections change when specific events are added into the equation.
Wave is free accounting software designed for very small businesses and independent contractors. With Wave, users can generate accounting reports, track sales and expenses, manage invoices and payments and pay employees. Wave also recently started offering a cash flow statement feature.
Wave performs accounting on an accrual basis, meaning that income and expenses are recorded from the moment an invoice is created (rather than when it is paid). Wave’s cash flow statement, on the other hand, shows you funds moving in and out of your accounts based on the actual date of payment, so you can see where your cash flow really stands. Wave also offers comparative reporting so you can compare cash flow from different periods.
How does your business manage cash flow? Have you used these tools or any others? Let us know on Twitter @Revenued_com.
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