Keeping on top of cash flow is essential for managing and running your business effectively, regardless of its size, but it is especially important for small and medium-sized businesses.

An article for Daily Business Magazine recently offered some advice to companies about how they can manage their cash outflow. This refers to any money that is paid out of the business, whether that’s in staff wages, payments to suppliers or taxation.

The publication cited figures from QuickBooks, which revealed that 61 per cent of small business owners didn’t know how much they had spent each month.

One of the most important elements of cash outflows is that you as a business can control them, the publication noted. It therefore advised taking steps such as opening a second account where you can transfer the money you’ll require to cover staff wages and your tax obligations.

Another tip is to be open and honest with your suppliers if you are struggling with your cash flow and therefore to make payments to them.

The publication noted that many suppliers will be “very receptive to helping and deferring for a period or even agreeing a phased payment plan”.

An article for Forbes recently pointed out that, because many small businesses operate with a tight cash flow, it’s important that they are prompt at sending out invoices and that they monitor the payment and collection of those invoices closely.

If you know that cash flow is an area your business is finding challenging, get in touch with our cash flow consultants today to find out what improvements you could make to your accounting and financial systems to improve the situation.