December 4, 2019
Imagine how difficult managing cash flow must have been before computers came into the picture. Each time cash came in and went out, it had to manually recorded and needed frequent updates to the accounting books (actual books!). With the human tendency for error, something almost always got left out. We have come a long way since the time of the William Burroughs’ adding machine, the first-ever commercially viable adding machine.
Yet, small businesses struggle with problems like high overhead expenses, excess inventory, and slow-paying invoices—all of which can be traced back to inefficient cash flow management. If you want to know more about how you can manage your business’s cash flow, check out this guide to managing cash flow. Business can overcome these by using various cash flow management technologies that are widely available today.
How Technology Helps Cash Flow Management
1. Better Ledger Management
Cash flow management platforms can keep track of how much money you owe to your suppliers and creditors, as well as how much money your customers or debtors owe you.
2. Expense Monitoring
Connect your business’s bank account with an expense monitoring platform to get instant access to details as to where the cash is coming from and where it is going. You can also set up alerts to avoid late fees and overdraft charges.
An essential software for your finance department is a forecasting software with a dashboard that can forecast seasonal and long-term cash flow. This is important for you to plan your expenses accordingly. The best cash flow management software can make accurate forecasts.
The Best Tools to Manage Your Cash Flow
This tool integrates with accounting platforms to provide both current cash flow data and forecasting. If you don’t want to try making sense of complex financial data, PlanGuru can do that for you. With plans starting at just $99 per month, this is best suited for small businesses. Compared to other tools on the market, its functionality is limited.
There are two ways in which this tool lets you track your business’s cash flow—cash flow forecasts and QuickBooks Cash Flow Projector. The former uses data from receivables, bank accounts, and payables to show you what your cash flow will look like a month into the future. The Cash Flow Projector allows you to manually enter data including the starting cash balance, and predicted cash receipts and business expenses, to give you a futuristic view (a few weeks ahead) of your cash flow.
This tool literally helps you keep your business afloat by letting you view your future financial position. It can integrate with many accounting platforms and gather data automatically. It can also give a forecast of what your cash flow will look like a couple of years into the future—where the business is heading – so that you can plan effectively. Plans start at $69.
Scoro is primarily a business management tool that includes cash flow management in its suite of services. It is highly reliable, and is highly rated by users. You can get on board for a fee of $899, and monthly plans start at $26.
This tool lets you keep a close eye on your company’s financials. You can monitor your financials on a daily, weekly, or monthly basis. Plus, it also connects with QuickBooks. The tool was built for using cash flow management to grow and evolve businesses. Plans start at $29 per month, for the standard plan with single user accessibility.
This is an all-in-one forecasting and reporting tool that not only gets the job done but also saves you a lot of time. It can also seamlessly integrate and work with most leading accounting software. You can have everything you need in one place. You can try it for free for a short period, after which you can buy plans starting at less than $30 per month.
This software allows you to track your invoices, bills and due dates so you can see who owes you what, when they need to pay you, when your bills are due, and if you’ll have the money to pay them. It also lets you track late and partial payments and sync them with other tools including QuickBooks and Xero. DryRun’s most interesting feature is the ability to analyze your cash flow situation by creating multiple “what if” scenarios to compare outcomes.
This is designed specifically for small businesses and independent contractors. Business owners can use this tool to generate reports, track sales and expenses, pay employees, and manage invoices and payments. The cash flow statement feature was introduced recently. Wave tracks income and expenses from the moment an invoice is created, rather than when it is paid. The cash flow statement feature shows funds based on the actual date of payment so you can know where the cash flow really is.
Although not as sophisticated as the tools mentioned above, Google Docs offers several user-generated templates for cash flow management. For small business owners in particular, they can provide a simple introduction to tracking, monitoring, and forecasting cash flow.
Managing and analyzing cash flow is tedious and often stressful. There is no good reason why business owners should spend so much time managing their cash flow when these tools can do it better and faster. A business owner should be allowed to focus on growing the business.
Joseph Brady is Senior Director of Digital Marketing for Reliant Funding, a provider of short-term working capital to small and mid-sized businesses nationwide. He has more than 14 years of experience in B2B digital marketing, optimization and operations, with a focus in the financial services market.