Cash Manager Limited: Startup 101: Using Simple Accounting Software to Monitor Cashflow

April 02, 2015

Startup 101: Using Simple Accounting Software to Monitor Cashflow

Cashflow is an all-important metric for every small business. Naturally, there will be peaks and troughs, but knowing exactly what your cashflow is and how to accurately predict it is key when you are looking to invest internally and expand. Here are a few quick and easy tips on how to best utilize simple accounting software to both monitor and predict your business’s cashflow.

An Invoice Does Not Necessarily Mean Income…

When you make a big sale or take on a client that is going to make you a lot of money, it can be tempting to put that money straight into your books. Be aware, however, that you might not actually be getting that money straight away. While a client may have agreed to pay you £10,000, double check on the invoice that this money is due straight away and not in 3 months time. Income is not income until it hits your bank account – use simple accounting software to help determine when money is there to be spent and when it is not.

…And An Expense May Not Be A Cost

It is just as important to cover all bases when making a payment as it is when receiving one. If you decide to invest in a new office computer, for example, but agreed to pay in installments or even delay payment for a month, make sure this is noted. If outgoings are incorrectly declared, you can find yourself unknowingly overspending or under-investing. Simple accounting software can be a useful tool both for declaring and monitoring your monthly outgoings.

Plan For The Seasons

You may be wondering where I’m going with this, but do bear with me! If your business has dedicated premises, chances are you will be paying utility bills of some sort. While utilities like broadband and business taxes will be constant throughout the year, your electricity and heating bills may not be. Bear in mind while forecasting for the current year that some utilities are likely to spike in the colder months and budget accordingly. Some businesses’ cashflow suffers in the winter months, so use simple accounting software to make sure you’re covered for a spike in utility bills.

Remember To Be Realistic

Above all else, as someone running a startup or small business, it is vital to be realistic. Everyone wants their business to hit the bigtime, but it won’t happen overnight. When forecasting your cashflow, remember that significant growth rarely takes place without significant investment. Sure, you might set realistic targets and then smash them, but you’re just as likely not to. As long as you don’t overstretch yourself you should be fine, but in this case it pays to have high quality simple accounting software with an in-built functionality for accurately and sensibly forecasting cashflow.

Want To Know More?

Using simple accounting software to forecast your cashflow can seem daunting at first, and often businesspeople can be reluctant to place such a significant part of their business’s future in the hands of a piece of software. To find out more, download Cash Manager’s comprehensive guide to Small Business Accounting Software today!

Click on the image below to download Cash Manager‘s accounts software for small business today.