Cash flow is the lifeblood of every small business. Effective cash management makes a big difference in whether or not your business succeeds. With the right tools and information, you can manage the money that flows into your business, so the enterprise prospers. Below is a guide to help you better budget your business. 

What Is Cash Management?

The process of gathering, disbursing, and short-term investing cash that comes into a business is called cash management. Maintaining sufficient cash flow is essential to keeping an enterprise on firm financial ground. If you don’t have enough cash to pay your bills on time, the company may become insolvent, which can lead to bankruptcy.  

What Is a Cash Flow Statement? 

This financial document compares the amount of cash and other highly liquid assets incoming and outgoing over a specified period, such as a week, month, quarter, or year. Unlike an income statement, it will not factor in depreciation. This is a helpful gauge of the liquidity and overall financial health of your business. It will show whether you have enough money available to pay creditors or fund expansion. Tracking it over the long term can help you identify patterns and areas of friction. 

What Tools Help With Cash Flow Management? 

Using various tools and techniques will help keep your business solvent. A 30- to 60-day cash flow budget and a one- to two-year financial projections chart can make it easy to plan for spending. Offer customers discounts if they pay early or with cash rather than by credit card, as this can save you money on bank fees and get cash into your hands faster. Hiring an accounting and bookkeeping company to assist with cash management will free your time to focus on generating more business. 

Small business owners in Texarkana, TX, can rely on the accounting and bookkeeping services of Erie & Associates, P.C. With their deep understanding and business experience in effective cash management, their team is equipped to serve your financial projection and reporting needs. Schedule a consultation today by calling (903) 792-6651. For more information about what they do, visit them online.