Managing cash flow is always an important part of managing a business, but for SMB’s it presents a unique challenge that their larger brethren can often-times avoid. Mid-market and large corporations typically have ready access to cash that SMB’s simply don’t have. They also have tools in place to manage cash that SMB’s lack.
Let’s take a closer look at this and see if there is a way for SMB’s to access tools and resources that they have not been able to take advantage of in the past.
Three sources of cash that businesses can access.
Cash from investing – Generated investing in long term assets and selling them. This can happen when a company owns a piece of real estate and sells it at a profit.
Cash from Finances – Generated from loans and lines of credit.
Cash from operations – Generated from running the business when revenues are higher than expenses, resulting in an increase in cash.
Access to cash for SMB’s is becoming more accessible.
While SMB’s have very little access to cash from investing, access to cash from finances is growing. Traditional banks may have made tightened up avenues for small business to access cash, but alternative lenders have grown significantly. That said, the cost of loans and lines of credit from these alternative sources can be very expensive. That leave cash from operations as the main source of cash for SMB’s.
Cash from operations.
With cash from operations being the main source of funding for SMB’s, it’s critical for SMB’s to know where they stand from a cash flow prospective. Because so many SMB’s operate with small reserves, the question that they need answered on a daily basis is “How many days of cash do I have available?”. This can be a very difficult answer to reach as businesses are transaction driven with deposits coming in and expenses being paid. So, what’s the answer?
The answer lies in solutions that are being built specifically for SMB’s that are designed to analyze cash flow and monitor how the business is performing. By capturing your bank, expense and revenue data, these systems can create an extremely accurate picture of what the current cash flow looks like and tell you how many days of cash your business has.
How do I get cash flow tools for my small business?
There is a balance between using cash flow tools and being your own accountant. Expex built Carly to help small businesses manage their cash flow, affording them the tools for financial intelligence and to create healthy businesses.
Let Carly be the last bookkeeper you will ever hire.