The Benefits of Cash Flow Management
(2 minute read)
Managing small business finances can be confusing, exhausting and intimidating. To do it properly, requires discipline and conscious effort. Many small business owners are very effective at creating great products and services, but not particularly adept at managing their finances. The tragedy is that many sound business ventures fail because of poor financial management. Implementing an effective, real time cash flow management system is well worth the investment and tends to pay immediate dividends. Listed below are some of the primary benefits.
1) Transparency. The tracking of income, expenses and transactions, in real time, provides bottom line transparency. Nothing builds trust and confidence like transparency. In many instances, what a small business owner needs more than anything else, is a dose of financial honesty.
2) Clarity. Cash flow management eliminates muddled guesswork and speculative estimates. Business owners must think clearly, in real time, when it comes to their finances. Hindsight vision often arrives too late to avert a developing crisis. Is this a trend, or an aberration? Consistent cash flow management will shed light on the answer.
3) Goals, Targets, Objectives. Cash flow management informs small business owners to more accurately establish realistic goals and objectives, both long term and short term. It also provides a means of more accurately assessing the progress of those goals and objectives.
4) Power and control. Knowledge is power for the small business owner. If they arm themselves with detailed, real time financial knowledge, they significantly enhance their control over those finances.
5) Accountability, responsibility and discipline. Incorporating the consistent use of cash flow metrics into daily business operations fosters the habit of routine accountability, responsibility and discipline.
6) Profitability. The objective for most small business owners is to realize a profit. Cash flow management, when properly understood, sheds light on whether a small business is profitable, and if not currently profitable, how far away it stands from profitability.
7) Minimize fraud. Cash flow management tools can provide daily updates regarding bank account transfers, debit card charges and credit card transactions, which significantly enhances an owner's ability to detect and timely address fraud.
8) Tax planning. If a business owner only thinks about taxes when they are due, they increase their chances of paying more in taxes than the law requires, by failing to avail themselves of legitimate deductions. This is especially true for small business owners who mix their personal and business finances.
9) Mitigate risk. Cash flow management can serve to inform small business owners of a pending cash flow crisis and to avoid being blindsided by credit card statements. The enhanced capacity to forecast what's on the horizon is invaluable.
10) Debt reduction. The elimination or reduction of debt becomes much easier to plan and execute when a small business owner has a firm handle on their cash flow.
11) Reduce volatility. Effective cash flow management can aid the small business owner in reducing and/or eliminating the dramatic and unanticipated swings between positive and negative cash flow status.
12) Seize opportunities. A small business owner who has command over his or her cash flow is much better positioned, informed and empowered to seize those unique market opportunities that present themselves. Such opportunities often serve as the difference between success and failure.
If you are a solopreneur, small business owner or self employed, and ready to explore the benefits of seizing control of your small business finances, there are some very simple technology tools out there just waiting. At TrueView, our mission is to reduce the complexity of small business cash flow management so that you can focus on pursuing your passion. We offer a free trial and a demo so that you can experiment with our features and quickly come to appreciate the immense benefits. There is no need to go it alone.
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