By Jon Fasoli, VP and Segment Leader, Small Business and Self-Employed Group at Intuit

Financial forecasting can be the lifeblood of your business, especially if you want happy employees, a content landlord, and more opportunities to grow. And part of that involves keeping a watchful eye on your cash flow.

Money coming in is great but, as most business owners will tell you, a lot of money goes out too. From utilities, to rent, salaries, suppliers, lawyers, taxes, and more, it can be overwhelming. And ultimately your success will come from finding a balance between income and expenditures.

This was never truer than during the pandemic when we saw small business owners pivot and use this time to get more educated about their finances. And it paid off. In fact, some of the worst-hit businesses are now back to their pre-pandemic levels.

A recent Intuit report found that small businesses’ monthly revenues were 25% higher in June than their pre-pandemic benchmark. In July, they were 6% higher.

How to Improve Your Cash Flow

As we enter the holiday season and the next big quarter for small businesses, here are some of the clever ways you can use to optimize cash flow in your business:

1- Focus on Cash Generating Activity

It’s important to focus on the pieces of your business that bring in the most revenue.

Ask yourself, “What is the main cash-generating activity of my business?”

This could include sales, marketing, a particular type of service, or a specific offering that is unique to your company.

The activities that provide the majority of cash flow have a big impact on profitability and should be where most of your time and attention is spent.

For instance, many restaurants during COVID scaled back their menus to focus on their most profitable items or chose only to provide one meal of the day, opting out of less-profitable breakfast and lunch services.

By dedicating themselves to the projects that brought in the most cash, they were able to keep other expenses down and stay afloat.

This is a learning that we can take forward and apply all year round.

2- Use Financial Reports as a Resource

It can be easy to avoid reality by ignoring your financial reports. However, they are your most valuable resource!

Look at your finances regularly so you have complete visibility into your financial picture.

The Payables Report is something to keep a close eye on. A Payables Report gives you data on how much money
your company owes. And managing your money and payables ensures that you pay your vendors in a timely manner, forecasts your cash outflows, and determines which vendors cost you the most.

You want to make sure that you have enough capital to cover these future obligations, so it’s important to keep an eye on this piece of the cash flow equation.

Reviewing your overall 30-day cash flow with tools like QuickBooks Online allows you to get a big picture snapshot of your money-in and money-out. This can help you know where your business is going, so you can budget wisely and avoid any unexpected expenses to improve cash flow.

3- Leverage Your Network

If you need a little cash flow boost, instead of taking out loans or opening new credit cards, leverage your existing network to see what programs are available.

Talk to your bank and your landlord so they are aware of your current situation. Seek out government and private programs available for small business owners.

According to a recent survey from Intuit QuickBooks, as of March 2021 small businesses have made almost three times as many funding applications as they did during the first nine months of the pandemic.

Funding programs are out there and should be taken advantage of! Finding capital can be challenging, but tap into your network and you’ll be surprised how many options like this are out there and available to you.

The biggest asset to your business is you! And by getting scrappy and focusing on small changes to your cash flow management, you can make a big impact on the eventual success of your business.

Whether your business is struggling or thriving, these tips are sure to improve cash flow in your business.

Contributor

Jon Fasoli is the Vice President and Segment Leader of Small Business and Self-Employed at Intuit, where he leads teams that solve the problems facing small business owners as they look to grow and scale their businesses. In his position, Jon leads teams for the creation and growth of the entire product portfolio within Intuit QuickBooks.

Smart Hustle Resource:

Managing Cash Flow 101

Plastiq Helps You Pay and Get Paid Faster to Increase Cash Flow

Cash Flow Management Guide for The Rise of the Pandemic Entrepreneurs

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