There’s a well-known saying in business: “turnover is vanity, profit is sanity, but cash is reality”. More businesses fail through lack of cash than any other reason so managing your cash flow is vital.

Having enough money in your business can be a challenge. In a recent Sage survey, 57% of Irish businesses said access to funding is the main issue for their business. Having better cash flow can free up cash for your business, helping to keep it running and allowing you to invest for the future.

Here’s some ways that you can help improve your cash flow.

Visibility is key

Most business know that monitoring cash is essential. Figures show that 54% of businesses check their cash flow every day, while 85% do it weekly.

Having the right information available makes your cash flow forecasts more predictable. Link up the information from your sales database or daily till receipts to help predict when money could be coming into your business.

It’s also a good idea to connect your bank account into your software. Keeping your Sage software and bank synchronised has never been easier.

Sage One includes a bank feed which automatically connects to get the latest transactions from your bank.

For Sage Instant Accounts and Sage 50 Accounts, Sage e-banking is a simple plugin which offers the same functionality. See the list of compatible banks and download the plugin.

Manage the cash cycle

The fundamental principle of cash flow is to have more money coming into your business than you’re paying out. To make this a reality you need to get payments in more quickly and manage when your outgoings leave your business bank account.

Here’s a few ways that you can make that easier:

Get payments faster

Use electronic payments, rather than cash and cheques

If your customers are still paying you by cash or cheque, you’re not alone. In fact, Irish businesses account for 60% of the cheques used in the country.

Swapping to ePayments means your business receives the money directly into your account, saving time on banking and reducing late payments and delays waiting for cheques to clear.

Take a look at some of the figures: the average time to receive a payment when it’s been made electronically is 40 days versus 60-70 days for cheques. Just think what a difference receiving a payment 20-30 days earlier could make to your cash flow.

Increasing the use of ePayments is the focus of the National Payments Plan, which was launched by the government in April 2013. Find out more about the NPP and what it means for your business.

When you make the change to ePayments, Sage software makes it simple. Our software lets you:

• Keep track of payments more effectively
• Keep a record of bank payments and payroll files
• Avoid duplication and mistakes
• Generate a payment file in a couple of clicks, which you can then submit to your bank

Allow customers to pay invoices online or by phone

You send out the invoice and then wait for payment. Sometimes it comes through on time but at other times you need to chase for payment. This can have a big impact on your cash flow, as well as your time.

Get paid more quickly by allowing customers to pay you online or by phone. It’s simpler for them and easier for you. The system is compatible with Sage One, Sage Instant Accounts and Sage 50 Accounts. Find out more about e-invoices.

SEPA makes it quicker to get payments from the rest of Europe

The introduction of SEPA means it’s now much faster to receive payments from other SEPA countries in Europe. Once the money is received in your account, it’s available by the end of the next business day at the latest.

Sage software helps you to manage these payments by:

• Validating BIC and IBAN numbers for ePayments within Europe
• Converting bank codes into new BIC and IBAN codes

Manage when payments leave your account

Having control over when the money leaves your account helps you manage your cash flow more effectively.

ePayments are a much better way of making payments than cheques, as you know exactly when the money will be leaving your account. With cheques, you don’t know when the supplier will actually cash it, which can cause problems.

Swapping to ePayments means you don’t have to remember payments you’ve made which are not yet shown in your bank balance. This avoids the risk of spending the money twice and helps to make your forecasting more accurate.

Find out more about changing to ePayments.

Keep looking ahead

It’s always difficult to predict exactly what will happen with your company’s cash flow, but you should have a forecast. Consider:

• when the peak and slow periods are
• when you have annual expenses
• how legislation changes can affect things like staff salaries and pensions

The further ahead you can plan, the more likely you are to be able to ride out the tricky times.

Sage software can help you to manage your cash flow forecast by giving you historical data to run month on month and year on year comparisons. You can also spot trends and opportunities to help your business grow.