It requires no great intelligence to know that your business can keep running only if you have positive cashflow. Managing the business cashflow becomes a key challenge to every entrepreneur. This is particularly true for the first few years of business.
A typical cashflow statement in business will reflect the amounts the business hopes to receive by way of income from various sources and the expenses to be incurred. You can prepare a current cashflow statement as well as a future cashflow projection. The cashflow statement for the future will be accompanied by a set of assumptions based on which the statement has been prepared.
To cite an example, the volume of sales projected and the price realization expected a few months later can be speculative in nature. These may depend on the market situation and the demand/supply matrix present then. Changes in this can completely change to the complexion of the cashflow for the future.
Keeping these in consideration, it is important to learn about the tools available to manage business cashflow effectively. Let’s check out five such tools here.
Float is an effective cashflow management tool and easily integrates with the general accounting software you may already be using. The unique feature of this software tool for is that it can pick up the data from your virtual books of accounts and display the cashflow statement on the screen automatically. It gives you the option of selecting the period from weekly and monthly to go up to 3 years. There is a monthly subscription for using this tool.
PlanGuru is a dynamic tool that provides you with not just the cashflow statement but also helps you prepare the balance sheet and the income statement. This cashflow management tool can make projections even for a 10-year period based on the available data. It saves you a lot of time trying to prepare elaborate spreadsheets for submission to your bank or other stakeholders. The software has a monthly subscription tag as well.
QuickBooks is more popularly known as the accounting software that most businesses already use. That makes it easier for the QuickBooks cashflow management tool to prepare the statements and present them to you in the appropriate format. Many small businesses have gained by subscribing to this cashflow management tool along with the main accounting software.
Caflou is a cashflow management software that is 100% digital. The advantage of this software is that it goes beyond just the cashflow statement. It comes as a comprehensive package for managing your business. The cashflow management tool digs deeper into adding more information. These include the details of sources of income and expenditure. You will get a dashboard view of the key customers from whom you can expect the income and the suppliers to whom you owe payments. This is an organized tool.
Pulse is so named to remind you that the business cashflow is the pulse of the organization. The cashflow management tool is relatively flexible and allows you to make additions and alterations to it. This helps you understand how different the future cashflow will appear if the additions you made were to be incorporated. It integrates easily with the accounting software you are using. Pulse is used by professional accountants too while helping their clients with cashflow projections. The tool allows for a lot of customization.
You can study each of these and maybe other tools available and choose the one that seems to match the needs of your business.
Some More Information on Cashflow Management
If you are not fully conversant with the financial terms used frequently, you must equip yourself with such terms. There may be online resources available for this.
The elements of effective management of cashflow in business depend on how good you are at keeping a close track of the various streams of income and where they are spent.
This is essential because, on occasions when you feel you are running short of cash, you can aggressively push the areas from where your business has to receive funds. Similarly, you can take decisions to defer certain payments, say, to your vendors or other creditors. This will release the pressure on the cashflow and make life easier for you to run the day to day business.