Fuquay Varina Small Business Cash Flow Management

Understanding Cash Flow Management

Whether you’re planning on hiring new staff members, expanding your marketing, or are looking at how you can offer raises at your Fuquay-Varina small business, you have to know your cash flow first. Cash flow management and monitoring gives you a clear, accurate estimation of how much money you have on hand. Just as importantly, it provides projections of shifts and changes you can expect so you have a solid understanding of how much cash you’ll have at any given time throughout your fiscal year.

Small Business Cash Flow Monitoring in Fuquay-Varina

At C.E. Thorn, CPA, PLLC, we can advise you with cash cash flow management for small businesses  in Fuquay Varinaflow management for small business as part of the financial services in Fuquay-Varina we offer. With our experienced accountants keeping you notified and up-to-date with changes in the amount of money coming in or going out of your business, you can have the clarity and confidence necessary to control your business’s financial standing. Always knowing whether you have a positive cash flow with income coming in or a negative flow in which you have excess expenditures, empowers you to make improved decisions and plan for your future. 

Understanding Profit Vs Cash Flow

Many small business owners confuse profit with cash flow, and it’s important to note that they are very different financial aspects. Your profit balances your income after all expenses and taxes are removed. On the other hand your cash flow is an ongoing look at how cash is moving in and out of your business and provides a clear look at trends in your incoming and outgoing finances. 

Cash flow management provides necessary answers to questions such as:

  • When is money coming into/going out of my business?
  • Where is money coming from/going to?
  • Why is there an increase/reduction in incoming/outgoing money?

It’s clear how important it is for your business that you have the answers to these questions. Knowing these figures is essential when you’re looking into a business loan or credit, plus, it can help you look ahead to potential cash-related problems.

Cash Flow Management for Long Term Success 

Because your business should always have money coming in or going out as you collect revenue or pay for services, you will see peaks and valleys in your cash flow. Knowing in advance how your Fuquay-Varina small business will see these peaks and valleys prevents you from hitting a time of limited cash availability. 

With our cash flow monitoring, we can help you with the analysis necessary to determine when or why you may experience increased outgoing expenses or a decrease in income, whether it’s due to seasonal patterns, local events, or other factors. Our experienced accounting team can help you recognize where you may face obstacles and recognize problems so you can fix them. 

Gaps in Annual Cash Flow

  • Intentional gaps are known reductions in cash flow that often come from making a large purchase for your business, hiring more team members, or expanding your business
  • Unavoidable gaps typically are the seasonal trends in your business such as tourism, yearly sporting events, or even back to school. Knowing when these gaps are coming helps you plan in advance. 
  • Unforseen gaps are the unplanned events you didn’t know were coming, such as a natural disaster, wholesalers changing prices, or even poor cash management decisions.

Improving the Cash Flow of Your Fuquay-Varina Business

While many Fuquay-Varina business owners feel overwhelmed at analyzing cash flow, look at these four areas, as these are often the biggest locations for expenses. 

  • Accounts receivable are the payments owed to your business. Late payments reduce your incoming money.
  • Accounts payable are the amounts owed to suppliers and vendors. Consider where you can decrease the cash flowing out in this category.
  • Credit terms, or the time limits you give your customers or clients can decrease your cash flow, especially when the payments don’t come in on time. 
  • Over-ordering inventory means you are tying up your cash where it could be put somewhere else or used as a float during downturns in positive cash flow. Only order what you need to keep up with demand. 

8 Tips for Controlling Your Cash Flow

  1. Know your exact cash balance at all times.
  2. Analyze your financial history and data to create accurate cash flow projections. 
  3. Know exactly how much you need to break even, to where what you bring in is equal to your expenses. 
  4. Don’t factor in profits when executing a cash flow management process.
  5. Keep a safety net of cash to keep your business operating during slow periods. 
  6. Consider adjusting credit limits as needed to reduce negative cash flow caused by outstanding payments from your customers.
  7. Monitor your cash flow threshold and set a minimum limit to be aware of potential shortcomings.
  8. Track your cash monthly so you can continue to manage your incoming and outgoing money to meet your needs.

Contact Us for Experienced Cash Flow Management Support in Fuquay-Varina

At C.E. Thorn, CPA, PLLC, we can help you create a realistic budget for your business and manage your cash flow by developing a cash flow strategy and reviewing and revising it as needed.

To speak with a leading small business accountant, call us today at 919-420-0092 or complete the online contact form today.

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