7 Ways Bookkeepers Can Help Improve Cash Flow

Friday, 22 May 2020

Bookkeepers are the backbone of a business as they maintain updated records of all the transactions. These accurate and organised records offer substantial financial information to entrepreneurs about the bottom-line of their entity.

It aids in maintaining positive cash flow and reducing the workload of the business owners in Sydney. Every small and big organisation needs the support of a professional and well-trained bookkeeper who can help the business grow with his insightful deductions accumulated from the meticulously recorded financial data.

This is the reason why most entrepreneurs rely on a renowned and reputable company for bookkeeping in Sydney to enhance the profitability of their venture. Their unbiased advice helps in ascertaining the strengths and weaknesses of the organisation.

The information is leveraged by the business owner to make improvements in the processes and amplify the productivity and the revenue. Let us take a look at how bookkeepers help in improving the cash flow of a company.

1. Keeping Track of Every Transaction

Bookkeepers monitor the cash flow on a daily basis, which means tracking all the receivables and payments without any errors. It ensures that all the transactions are accurately categorised under the correct sections in the books.

They verify whether the amount on the cheque matches with the figure in the accounts or not and all the payments are authorised and recorded. They utilise a record-keeping system and cloud-based accounting software which reduce manual labour and increase efficiency.

With regular monitoring, the bookkeeper keeps a tab on every dollar coming in and going out of the organisation in the city of Sydney. Thus the entrepreneurs can spend wisely with proper knowledge of the available capital. Cloud bookkeeping allows all the stakeholders to keep track of the finances in real-time as they get all the updates on their mobile phones.

It helps the members of the management who are remote working from a different location to stay updated and well-informed. The real-time live updates of incoming and outgoing capital ensure that all the decision-makers are on the same page and have access to the required information.  

2. Forecasting The Cash Flow   

Bookkeepers follow a farsighted approach and create a cash flow forecast that has projections of the income and expenditure on a monthly and quarterly basis. The estimate of cash flow allows effective management of liquidity which makes certain that the business has enough funds to meet its monetary needs and obligations.

It gives an approximation of the flow of capital and the future financial standing of the entity through the anticipation of payments and receivables. The forecast gives an idea about the amount that will be going in and out of business at any given time so that the owner can make informed financial decisions.

For example, if you want to purchase expensive equipment next month but the forecast shows that you will not have enough capital for it, then you can avoid putting the cash flow in the red zone by deferring the purchase by a few months.

The cash flow forecast allows entrepreneurs in Sydney to spread the expenses evenly throughout the year. Without proper planning, the entrepreneur will not be able to understand the best way of utilising capital.

3. Invoicing Proactively And Effectively

Managing positive cash flow requires the incomings to keep flowing regularly without any delay. The bookkeepers maintain the receivables by sending out invoices as soon as the deliveries are made to the clients. The invoices have the terms of payment clearly mentioned on the bills.

They are sent to four to five people at the client’s office in Sydney so that everyone involved with the project gets the message. It has a clause on late payment charges and incentives for making advance payment.

The advance payment offer makes sure that the incomings are greater than outgoings at all times and helps in maintaining positive cash flow. They utilise invoicing systems with automated features that produce recurring bills and send reminders to ensure appropriate follow-ups.

Since failing to track invoices is a common accounting mistake made by businesses, bookkeepers help in avoiding these blunders that cost a lot of money. The invoices also include bank account details which make it easy for the clients to do online funds transfer. The bills also have the address for posting a cheque to the office and making payment effortless.  

4. Carrying Out Bank Reconciliations Regularly

All the bookkeepers are particular about bank reconciliations as they allow them to match the bank statements with the internal financial records. It aids in identifying any discrepancies in the books that can arise due to cash transactions, forgotten invoices and errors in calculations.

It gives the business owners the time to correct the records before submitting the reports to the Australian Taxation Office to avoid penalties. It helps in monitoring the administrative work and identifying loopholes in it, such as eliminating the chances of bounced cheques that have been sent to the suppliers.

It is also beneficial in finding out any fraudulent activity and spotting accounting errors that must be controlled immediately. Frauds can include acts of issuing cheques without authorisation and making cash withdrawals without permission.

Thus bank reconciliation helps in clearing all doubts and maintains transparency. Large firms reconcile bank accounts every day, and others do it fortnightly or monthly depending on the financial activity and risk of fraud in their organisation.  

5. Reducing Expenses Through Better Decision Making

Bookkeepers are the wizards who can save taxes by claiming business deductions that are otherwise neglected by the business owners. Also, the well-organised books mean that the entrepreneurs don’t have to look for long lost bills at the time of filing business taxes.

They help in maintaining the ideal volume of inventory and do not let the business owner squander money by storing excess stock. They provide assistance in reducing unnecessary expenses by utilising technology, such as conducting meetings online in Sydney instead of travelling and spending on airfare, hotels and meals.

They can suggest moving to a less expensive location to save the rent and minimise the expenses on utilities through judicious utilisation. They make sure that the company sticks to the budget planned for a stipulated period and does not exceed the limit at any time. The everyday cost-cutting measures assist in reducing the expenses and aid in saving money.

6. Maintaining Good Rapport With Suppliers

Suppliers are a vital part of the supply chain network. Thus bookkeepers work on building strong ties with them to keep getting the supplies on time and make payments accordingly.

It helps in getting the stock in the best condition and getting incentives from them for making timely or advance payment to them. They negotiate with the suppliers and ask them to reduce the asking price, which helps in improving the cash flow.

They have contacts across the industry and can find suppliers in Sydney who offer a better price and stock. They communicate with them regularly and set the tone of the relationship from the beginning without any false promises. They respond to them promptly and understand their cash flow needs and turn them into loyal partners of the business.        

7. Effective Debt Management

Every business has debts, such as bank loans or an amount owed to money lenders in Sydney. These debts must be managed through timely payments of instalments and avoiding overburdening of the business with too many loans.

Bookkeepers keep track of all the debts and include them in the cash flow forecast along with other payments so that they don’t get neglected and are a part of the financial projections. Also, it ensures that these payments do not lead to negative cash flow and the business has the required capital it needs to stay afloat and make progress in the future.

They evaluate the interest rates and get the loans refinanced to enjoy lower monthly instalment rates. They meet with the banker and inform them about the challenges of the business and identify new sources of funding.

Conclusion

Hiring a bookkeeper in Sydney is a necessity for businesses as it makes their life easier. They manage the financial aspect of the venture and ensure that it is flourishing and moving in the right direction. As stated above, they are responsible for managing the cash flow through a variety of activities, and thus, are an indispensable part of an organisation.  

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