How to crush the cash flow crunch and set your business up for growth in 2021

Even the most profitable businesses can be undone by poor cash flow, no more so than in the current climate. As we return to work in 2021, following a year that many small business owners would rather forget, it is key that businesses ensure they have the right inflows of cash at the right time to pay staff and suppliers otherwise keeping a business afloat can get very tricky indeed, writes Mindy Eiermann, Director of Product Management, Intuit QuickBooks Australia.

If this is something your business is struggling with, you’re not alone. Even before the start of the COVID-19 crisis last year, research commissioned by Intuit found that 69 per cent of businesses worldwide were stressed out by cash flow issues.

It’s why we recently developed the Cash Flow Planner – a tool for businesses to use in response to cash flow problems posed by COVID-19. Powered by Machine Learning and designed to support Aussie SMBs through the recovery stages of COVID-19 and beyond, this tool is the first of its kind in the industry.

Using Machine Learning, the Cash Flow Planner gives users a view of their future daily cash position for the next three months in real-time, via QuickBooks. You can use it in a range of ways, including:

Gaining visibility into your upcoming bills or other recurring expenses
Help to determine if your cash flow position is strong enough to make payroll
Helping them determine if you can afford new equipment or other expenditure through scenario planning.

As we return to work this year with high hopes for a more successful year, Mindy Eiermann, Director of Product Management at Intuit QuickBooks gives her top tips to ensure that a cash flow crunch doesn’t catch your business out:

To stay on top of outgoings:

Defer costs where appropriate

Look into what government tax relief options exist for your business. During COVID-19 the government made a number of deferral programs available with the goal of freeing up cash for businesses who are struggling. Check at both the federal and state level to see what might apply to your business, or work with your accountant to get tips on what you might be eligible for.

When it comes to your outgoings, don’t be afraid to ask for help. If you’re finding it hard to make payments on time, consider asking vendor partners, lenders or government agencies if deferring payments or restructuring terms and rates is an option.

Take a second look at your discretionary expenses.

Go through your discretionary expenses – such as marketing budgets, subscriptions and memberships – with a fine tooth comb to see what can be cut. Often we can spend thousands without even realising it, simply by not paying attention to where money is leaking out of our business. The Cash Flow Planner can come in handy here, providing full visibility into upcoming bills or other recurring expenses.

Visibility, visibility, visibility.

Take advantage of the latest tech tools that can help you stay on top of your expenses with less legwork. QuickBooks Online can help you get there by allowing you to quickly scan receipts and other source documents and attach them to specific transactions, or use them to create new transactions.

You can also email receipts to your books in seconds. Simply snap or email your receipts and QuickBooks extracts the information, matches it to a transaction and categorises it for you.

Turning on class and location tracking will allow you to automate tracking, analysing and reporting of your business expenses.

To increase cash coming in:

Make sure you’re on top of who owes what

You’ll want to figure out which customers owe you the most money so you can open up the lines of communication to get those invoices paid. Tools like QuickBooks’ Open Invoices report can help you to quickly identify which of your clients’ customers owe the most money so you can direct your attention where it’s needed most.

Get help from automation to accelerate your invoicing.

Getting invoices out to clients fast should be a key part of your strategy. The invoicing feature in your cloud accounting software can help to accelerate how quickly you collect cash owed. Not only will it fill in the customer’s name, billing address and email when the client’s name is typed into an invoice template, it can pre-load items, based on the customer’s last order and set up recurring invoices.

This allows you to generate invoices faster and more accurately, emailing them to clients as soon as you’ve delivered your product or service and provide an online payment option.

Cash flow will continue to be a major threat to business continuity in 2021. Thankfully, there are numerous tools and support mechanisms that can make managing it far easier. By taking some of the legwork out of staying on top of ingoings and outgoings, you can free up your time to focus on building your business within 2021 and beyond.