7 WAYS BOOKKEEPERS CAN HELP IMPROVE CASH FLOW
Bookkeepers play a vital role in the business. They are the backbone of organisations that keep all of the company transactions accurate, organised, and up to date. Because of this, entrepreneurs have enough financial data regarding the profitability of their company.
Apart from being able to reduce the amount of work that entrepreneurs in Melbourne have, bookkeeping can also help keep the company’s cash flow positive. It is important for all SME’s and even large corporations to get the services of an experienced and skilled bookkeeper in Melbourne if they plan on growing their business. Aside from helping a business grow, a skilled bookkeeper will also accurately record a company’s financial data and apply accurate and insightful deductions.
This is one of the main reasons why many entrepreneurs go after popular and dependable bookkeeping firms. With the help of a renowned firm, an entrepreneur can ensure that the company’s profitability will be enhanced in the long run. A bookkeeper will provide impartial advice, which will help businessowners identify its own weaknesses and strengths of their company.
Records and reports from bookkeepers are generally used by a businessowner to improve the company’s processes and increase productivity. These can also be used to help increase the revenue of the company. Here are some of the ways bookkeepers can help improve the entity’s cash flow.
- METICULOUS MONITORING AND RECORDING OF EVERY SINGLE TRANSACTION
One of the tasks carried out by a bookkeeper is to scrutinize the cashflow of a company. This means that the bookkeeper tracks all the payments and receivables, and then records them without error. This is done daily to make sure that all business activities are accurate and are organised in different categories within the proper sectors in the system.
The bookkeeper will then check if the amount of money on the cheques correspond with the numbers or figures in the bank accounts. They also check if the disbursements are approved and are duly noted in the records. Most, if not all, bookkeepers make use of record keeping systems as well as cloud-based bookkeeping software that can eliminates most manual works and increase accuracy and efficiency.
A bookkeeper regularly monitors every dollar that comes in and out of a business in Melbourne. With this knowledge of the business’ finances, an entrepreneur is able to spend the company’s money wisely. In addition, with cloud-based bookkeeping, each stakeholder have real-time access to every transaction and are able to monitor financial activities using their smartphone, tablet, laptop, or any smart device.
This is a great advantage since each member of the board, who is working remotely, can still access vital, updated information and make informed decisions. This ensures that every individual involved in making important company decisions are in agreement and are able to access the necessary information when they need to.
- CASH FLOW FORECASTING
An experienced bookkeeper in Melbourne creates forecasts using cash flow data, which contains projections of a company’s income and expenses every month and every quarter using a farsighted approach. The cash flow estimates pave way for a more efficient management of the financial resources, thereby ensuring that the company has sufficient money to fulfill its financial requirements and obligations.
The bookkeeper’s cash flow forecast provides an estimate of the streamline of capital. It also gives an assessment of the financial status of a company in the future by calculating and estimating the receivables and payments. Forecasting provides an insight regarding the amount of cash will be coming in and going out of the company. This will allow the entrepreneur to make informed and smart financial decisions.
Let us just say, you are planning to procure a brand-new office equipment at the end of the month. However, your cash flow forecast indicates that your business will be unable to gather enough funds to purchase it. Because of this vital information, you can decide to purchase it in the next few months to avoid putting your cashflow in a complicated situation.
Entrepreneurs in Melbourne can distribute the expenditures equally throughout the entire year by referring to the cash flow forecast. Without this vital information, the business owner will fail to determine the most efficient way to use the business capital.
- EFFICIENT AND PROACTIVE INVOICING
To manage positive cashflow, incomings are required to maintain the regular flow without having delays. Bookkeepers generally send out invoices immediately after the goods are delivered to clients in order to maintain the receivables. Apart from the amount due, the invoice also clearly states the payment terms.
A bookkeeper will make sure that every person involved in the purchase or project will be notified, so the invoices are sent to at least four people. It clearly indicates incentives for advanced payments and penalties or charges for late payments.
Advanced payment incentives ensure that the incoming cash is always larger than the company expenditures. Thus, it ensures that positive cash flow is always maintained. Bookkeepers make use of invoicing systems like QuickBooks which has automated features. These systems create accurate, recurring bills. In addition, they will also automatically send reminders to follow-up appropriately.
Business often fail to properly monitor invoices, making it one of the most common accounting mistakes. This usually mistake can cost a lot of money. A bookkeeper can help prevent these mishaps. Aside from religiously monitoring invoices, a bookkeeper will also include a business’ bank account details to make payments easier for the company’s clients, via online money transfer. The invoices also contain the address of the business in case the client intends to post the cheque, which is another effortless way of paying.
- ROUTINE BANK RECONCILIATIONS
Most bookkeepers are meticulous when it comes to bank reconciliations. Each reputable bookkeeper in Melbourne knows how important it is to match the bank statements with the company’s internal financial statements. It helps identify if there are discrepancies in the statements, which commonly emerge due to cash transactions, errors in calculations, and overlooked invoices.
Bank reconciliations give entrepreneurs enough time to reconcile the records, before they are submitted to the Australian Taxation Office, thus avoiding penalties. These also helps keep track of administrative tasks and determine loopholes within the operation such as preventing bounced cheques from being sent to suppliers and creditors.
Another benefit of doing bank reconciliation regularly is that it helps determine if there are any fraudulent activity and accounting errors that need to be controlled quickly. Fraudulent activities include unauthorised issuing of cheques and unauthorised bank withdrawals.
Bank reconciliations maintain business transparency, which clears out all doubts and suspicions. Reconciliations are done differently depending on the size of the company, frequency of financial activities and the likelihood of fraud risk. Some large companies do it daily, while others do it monthly.
- REDUCING EXPENSES THROUGH BETTER DECISION MAKING
A bookkeeper is a whiz when it comes to saving taxes. They do this by claiming deductions that are often forgotten or overlooked by entrepreneurs. In addition, because books are well-organised, it is easier for business owners to locate long lost bills before the time of lodging business taxes.
A reputable bookkeeper in Melbourne will maintain the ideal volume of inventory. They will also prevent the entrepreneur throw away money by purchasing excess stock. Bookkeepers can help entrepreneurs minimise company expenses using technology.
For example, instead of traveling, spending money on plane tickets, meals and hotels; your bookkeeper may suggest conducting your important meetings on Skype, Zoom or any other online meeting platforms.
Furthermore, a bookkeeper may even suggest moving into a smaller, but cheaper office to save money on rent. They can also reduce the expenditures on utilities through sensible utilisation. They can create a budget plan that the company can follow and prevent them from exceeding the budget limit for a specific period of time. These daily cost-cutting methods will help reduce the expenditures and ultimately help a business save money.
- MAINTAINING GOOD RELATIONSHIP WITH SUPPLIERS
Suppliers play a vital role in the success of a business. Being the primary element in the supply chain network, a reputable bookkeeper in Melbourne make sure that the company has strong ties with them. This is to ensure that supplies always arrive on time. One way of doing so is by paying them in a timely and appropriate manner.
Apart from getting incentives, making advanced or timely payment to suppliers can help make sure that raw materials and other stocks are in the best condition. A bookkeeper can even help reduce the supplier’s asking price for their products by negotiating with them. This help improve the cash flow of the business.
Being reputable bookkeepers, they have contacts within a broad range of industries. They can find suppliers in Melbourne who will provide you with the best stock at the best price. From the start of the relationship, aside from setting the tone, these professionals will regularly communicate with these contacts without giving false promises. Bookkeepers will find out the cashflow needs of the suppliers and convert them to loyal and trusted business partners.
- EFFECTIVELY MANAGING DEBTS
All businesses have debts. Whether bank loans or money lenders in Melbourne, you can be sure that every business in Melbourne owe them money. It is vital to effectively manage the payments when paying these debts in installments to prevent the business from paying penalties.
A bookkeeper will monitor all the debts and ensure that they are paid on time or in advance. Generally, debts or loans are included in the cash flow forecast together with the payments made. This ensures that these loans are not overlooked and that they become a part of the financial estimates.
Effective debt management helps the company make sure that the payments do not end up in a negative cash flow. This also make sure that the organisation has enough capital to keep it operating and making progress in the near future.
In order for the company to benefit from lower instalment rates, a bookkeeper will assess the interest rates and even get these debts refinanced. A reputable bookkeeper may also meet with the creditors to notify them about the challenges that the business is facing and help the business find great sources of funding.
It is vital for business to get the services of a reputable bookkeeper in Melbourne as they make operating the business easier. Bookkeepers can handle the financial part of the business and make sure that it is thriving and moving towards the right direction. As mentioned previously, bookkeepers manage cash flow by carrying out various tasks. This makes them a valuable and irreplaceable part of a business.