If operating activities do not generate enough cash, even profitable companies can fail, as profits are tied up in outstanding accounts receivable or overstocked inventory, or when a company spends too much on capital expenditures. Companies not succeeding in collocting prompt payment from customers are also forced to draw from their cash reserves or seek outside financing to cover their overheads and day-to-day functions. Therefore, having adequate funds, in other words, a healthy cash flow, to fund daily company operations is key to a company’s long-term survival.
As poor cash management leads to cash flow shortages, a terrible mistake to make would be to make financial decisions based on what the current bank account balance shows, as the balance does not reveal what amounts might be on their way in or out of the company.
Accounting Service in Malaysia
Even though you have outsourced your company’s bookkeeping and accounts to JB accounting, keeping careful tabs on your cash flow will keep your business operations running smoothly from day to day, as well as on the long run.
Keep Your Books Accurate And Up-To-Date
You can understand your business cash-flow much better with well-kept financial records and comprehensive accounting reports. This is where accounting service in Malaysia plays a vital role. However, if you have yet to outsource your accounting functions, you need to actively keep track, check and oversee the cash flow entries that go into your business financial records.
Sending bills and accepting payment electronically speeds up the invoicing and payment process, compared to other traditional methods, and contributes to your company collecting bills more efficiently and having more cash on hand faster. Reducing payment terms and offering multiple payment methods will also expedite the debiting of more cash into your company’s cash flow.
Keep Your Accounting Process Simple
A reliable and straightforward accounting procedure offered by JB accounting will assist you in tracking your cash flow quickly. Therefore, at some point during your business’s growth and development, do consider outsourcing to an accounting service in Malaysia or engage the consultation service of one.
Separate Your Personal And Business Finances
Not infrequently, personal and company finances are not separated in the same bank account, and that affects the tracking the cash flow of your company. A dedicated company bank account should be where your company funds stream in and out, making it easier for you or your accountants to keep a consistent cash flow record and prevent unnecessary errors that might hamper your business operation.
Set Aside Your Cash Reserve
A cash reserve is invaluable when it comes to making sure you have a healthy business cash flow. The cash reserve is useful, especially for unforeseen situations, and for expanding business operations.