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Accounting 101: Here Is How An Accounting Software Helps In Cash Flow Management

Cash flow is really the lifeblood of businesses – both small- and medium-sized – and it is easy to see why. Businesses need cash to stay afloat. Without that, most businesses fall short on covering even the basic expenses, let alone being able to expand the business. So much so that there is an old maxim that talks about how businesses seldom collapse because of lack of profitability, but mostly because of lacking the cash to survive. In that regard, cash flow is not just, and far beyond, the profits you make. Paying wages, purchasing supplies, paying rents, etc. also comes under the purview of cash flow for the entire business. Invoices

For that reason, it is extremely important to closely track all the outgoing and incoming costs for your business, so that you are in a position to take pre-emptive decisions. Accounting software comes in extremely handy in this context. By keeping track of all your accounting data on a centralised location, accounting software provides you with the bird-eye view you need, in order to keep your business afloat. Accounting software provides capabilities far beyond just tracking financial history and doing the taxes. They are extremely efficient and pretty much automated when it comes to helping in cash flow management. 

Broadly speaking, accounting software helps you better manage cash flows by offering you the following abilities: 

Cash flow projections

To manage anything, you need to have some fair projections of that thing. It stays the same for cash flow management, too. Using accounting software, you can easily upload all the fixed as well as variable costs and revenues as and when they come. This is far better than doing it manually, using the pen-paper approach. Accounting software will automatically give you a detailed projection of your cash flow based on the inputs it receives. That way, you can always be up-to-date with how the cash flow looks for your business. Whenever you sense a dip coming, you can preemptively take the required measures, thus keeping your business out of cash flow troubles

Speeding up inflows

Apart from managing the net (inflow – outflow), it is also important to maximise the inflows and keep them coming in on time, without any delays. This has also been a struggle for many growing businesses. Again, taking the manual route of reminding and re-reminding the clients for payments is not really a good option. With accounting software, you get the power of automation at your fingertips. Whether you want to send an email, a text message, or an automated call, most accounting software come with the ability to let you set the time period after which a reminder should be sent out against different invoices. This way, you will not have to be involved in this process at all, and your inflows will be speedy and on time. 

Reducing and slowing down outflows

Again, to increase the net value (inflow – outflow), another way is to reduce or slow down the outflows. Accounting software helps you with that, too, by keeping you updated with all the upcoming bills and payments. That way, you never miss out on any payment deadline, which reduces a lot of late fees and interest that you would have had to otherwise bear. Apart from that, you can also use accounting software to ensure that you don’t pay money immaturely, and use that money to your business’ advantage for that month. It’s all automated, and at your fingertips with accounting software. 

Automated accounting

Accounting tasks are important for every organisation. However, they are also riddled with various mundane and routine operations. All of those can be easily automated so that you don’t spend any time or energy doing routine tasks. This includes tasks like sending out invoices, updating books, sending reminders, giving you alerts, and so many more. This gives you and your business the power to experiment on other things that directly impact business growth. 

A bird’s-eye view

Apart from all the features mentioned above (and more), accounting software brings to you all the metrics that you need in order to know how well your cash flows are performing. All of this is available on one software, without much effort, and this information can be used for the advantage of your business. You also have all the details about your incoming and outgoing payments so that you can take any required action beforehand, and never have any logistical issues while making financial decisions for your business. 

There is no denying the importance of accounting software for any business operating in 2022. With so much to do and so much information to manage, accounting and cash flow management is something that can be automated for the better. The businesses that realise this have taken a step in this direction and are already enjoying the benefits of this. For businesses who still haven’t moved to accounting software – now is the right time. Check out Dext accounting software for more details


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