Do the words ‘cash flow’ strike terror deep within you? If you are in business, you know that cash is king. If you run out of cash, you basically are out of business. Therefore it’s a smart idea to pay attention to your cash and your cash flow. Using financial tools such as software can help ensure you manage your cash flow well. Even a profitable business can go out of business if they don’t manage their cash flow well. No cash flow=no business. Here are some tips on cash flow to keep in mind. Consider these points for managing your cash flow better.

Profit or loss does not equal cash flow. This is because profit and loss are only one contributor to cash flow, and there are other equally important factors to consider: inventory management, accounts receivable, accounts payable, capital purchases, loans and debt payments, and timing. Considering profit and loss equivalent to cash flow is a mistake, since it does not take into account other important factors.

Software programs can help manage your cash flow. Good accounting software will let you budget income & expenses and will in exchange budget your cash flow. This makes it easier to make wise spending decisions, and not to overspend. After all, it’s hard to argue with the facts when they are sitting right there in front of you! Cash flow reports can also be a great help. These reports show information about the cash intakes and outflows for your business for the selected date range.

Good cash flow budgeting can save you money. Creating and sticking to a budget can help you in many different ways. Not only can you make better and more profitable decisions, but you can also pay less in late fees, attain discounts for paying early, and you can even lessen or eliminate your need for short term loans, sparing you the cost of paying interest. The flip side of this is also true: if you don’t analyze and plan your cash flow, it will cost you!

Use budgeting and financial analysis tools to do “what if” analysis. Using your financial and budgeting software to help you run ‘what-if’ scenarios can be helpful for your bottom line, and can therefore help improve your cash flow. For example, if I purchase an updated piece of equipment, what will the short and long term financial affects be? Using ‘what-if’ analysis can help keep your expenses in check, which can in turn improve your cash flow.

Pay close attention to your cash flow, use every tool at your disposal to help you, and you will be on the road to better cash flow and a flourishing business.

Situation: You are using an outdated software system, and there are distinct benefits such as improved efficiency and improved customer satisfaction. But you don’t want to move because the economy seems dismal, and you want to keep your money instead of spending it on software. Here are some questions you can ask yourself to help make the decision easier. If you are honest with your answers for each of these questions, your decision will be an easy one, either way.

• Will the time and money saved pay off the new system? How long will it take?

  Accounting software and payroll software for your business typically costs money. If a system is good, it will improve your efficiency enough that the money paid is well worth it. For instance, invoices are processed faster, bringing in cash more quickly. Inventory is accurate, so you know how many items to order and when to order them, so you keep just enough in stock, saving you money on costly ‘dead stock’ or backorders. These are just a few of the benefits you may be gaining by upgrading your software. Be sure that the benefits you gain are immediate enough that the cost of upgrading is worthwhile.

• Will customers benefit daily from the switch?

  You might be wondering, “What can accounting and payroll software do for my customers?” One shining example is that you can give your customers the information they request while they are on the phone, saving you the time of checking and calling them back. How many items are there in stock? What is my outstanding balance with your company? When is my payment due? Every time you have to check something out and call a customer back, that customer is waiting and you are spending double the time on the phone. If you upgrade to a new system, consider your customers. If they benefit daily from your software upgrade, it is probably worth it.

• Do you have a plan to make a smooth transition?

  Any software move involves a learning curve. With a plan in place, you can make that curve much shorter, and the whole process much smoother. Work with your software sales representative to help you develop a plan and timeline for your software switch. This plan can include steps for your own company, as well as additional tools offered by the company providing the software. Many software companies provide a variety of training and support methods. Find the ones that are right for you, and put them in your plan, so you won’t be tempted to ditch the new system halfway through the transition.

• Is there a compelling reason to move, outside of just technology?

  Some people just love technology for the simple fact that it’s new and cool. Especially during a slow economy, you have to ask yourself if this is the reason you are switching, or are there other compelling benefits? Switching for the sake of only technology is not a good idea unless you happen to have lots of spare money sitting around, or your software simply won’t work with new operating systems. Switching because there are true benefits to you, your business, and your customers is definitely reason enough to make the switch, especially during a slow economy.

When it comes to business, playing games is not a good strategy. However, there is something to be learned from those board games we have played over the years. Use these game strategies when you are searching for the right accounting software vendor for your business.

Pictionary

Don’t get out your paper and pencil just yet. Play Pictionary with accounting software vendors by having them show you instead of tell you. It’s easy for somebody to simply say, “Yes, our software can handle that.” Ask the vendor to show you in a demonstration how the system can actually handle the function, for instance, if you need recurring invoicing, have the vendor show you how their system handles that. By seeing it, you can be assured it works how you want it to.

Trivial Pursuit

Thankfully, you can do this without brightly colored pie shaped pieces. Play trivial pursuit with vendors by making sure you find out about even the most trivial of needs. If the shipping department really needs a piece of information on the packing list, ask about it! Just imagine the time you can save over a matter of years by ensuring your system can handle a wide number of processes or functions that may seem trivial. On the other hand, purchasing a system that cannot handle those things can cost your business big in time and money. Clarify on paper your most trivial of needs, so you can be sure that the new system you choose has something to handle them.

Chutes and Ladders

Do you remember this game from childhood, and how frustrating it was to be a space or two away from winning and then fall down a big slide or ‘chute’? In real life, nobody wants to climb a huge ladder and unexpectedly or mistakenly go down a monstrous slide. In much the same way, you should have a team of support experts standing behind their software and able to help when you need it. When you are trying to reach accounting software support, being transferred from person to person or infinitely on hold is nearly as bad as falling down a giant slide!

Monopoly

Hey, just because an accounting software vendor is well-known, doesn’t mean they have the monopoly on the market. There are many accounting software vendors and one of them is right for your business, you just have to do your research to find out which one is right for you!

All this game playing is really just another way of saying, be sure to put accounting software vendors to the test before purchasing a new system for your business. Since you will work with this vendor for many years, these are details you want to work hard to get right.

Does your accounting staff spend excessive time entering each component of a finished good into your software, in order to take the item out of inventory? Does your warehouse staff struggle with which items to pull in order to begin a manufacturing run? Are you in the dark about your true manufacturing costs and profitability? These are just some of the question that may be solved if you start to use assemblies within your manufacturing management software. Learn more about the terms associated with assemblies, and how they can work together to help your manufacturing business become more organized, operate more efficiently, and increase profitability.

Assemblies Maintenance

Assemblies Maintenance is the process of defining which components or parts make up your finished item. The finished item is known as an assembly. Most manufacturing management software will let you create an assembly with all of its components as well as labor (often set up as a ‘service’ inventory item), so that true costs may be calculated. The system may also allow you to include costs from outside services, such as sending out an item to have it painted, which can be helpful if the components require other services before being included in an assembly. Once the assembly for a standard assembly item has been created and saved within your software system, that assembly can be used again and again. You may choose to copy a previously saved assembly and customize it for a different customer, saving significant time.

Assemblies Production

A production plan is a sequential list of assemblies to be built, one at a time. During this ‘building’ process, components are removed from inventory. Many systems will also allow for ‘un-building’, which put components back in inventory, helpful when an assembly was not completed or an order was cancelled. This eliminates the need to remove (or return) individual item components from your software system, as all components are simultaneously removed when the build is completed. Prior to the creation of a production plan, a shortage report can be generated to verify whether all needed items are available in stock. Once the actual physical building of the item is completed on the shop floor, the assembly is then built within the software.

Serial and Lot Numbered Items

Some components within an assembly may contain lot or serial numbers. If you record and track the numbers for each of these components as you receive them into inventory, you may also be able to select which serial/lot number is being used as a component within the assembly you are building. This is an important feature for those who wish to keep tracking the number of the component, even after it has been built into an assembly. If this is a feature you require for your manufacturing operation, be sure to choose a system that allows for that capability.

Bill of Materials

The bill of materials is a document that shows all of the information about a production plan, including its assemblies and required components. This document can be created by the software system once a production plan has been created within the system. The bill of materials typically shows the quantity of components that are needed, and also the quantity that is currently on hand, so that missing components can be put on order. The bill of materials is also useful for warehouse staff, as it provides a comprehensive list of items that need to be pulled for a product run.

Setting up assemblies within your manufacturing management software can greatly help increase efficiency and profits for your manufacturing operation.

You are offering your employees a retirement plan, and perhaps you have even chosen to contribute money to each of their plans. Congratulations! Now think about how you keep track of that retirement information. You can keep the costs of managing your retirement plan down by automating the tracking of that information. Here are some ways to streamline it, and keep employees happy!

Use software instead of a spreadsheet.

Tracking 401(k) deductions with a payroll software system allows you to set up the calculations, and the 401(k) contribution is automatically calculated during time entry. This eliminates your manual calculation, which of course saves time and also reduces errors. You will wonder how you ever got by keeping track of this data in a spreadsheet.

Set up 401(k) deduction limits for employer and employee.

The ability to set up limits within a software system is extremely helpful! By setting up limits, you can be assured you take out no more than the deduction allowed by the federal government, or the amount specified by the employee. You can rest easy, knowing that you are compliant; whereas a spreadsheet makes it difficult to track that information.

Set up effective dates.

If you offer a 401(k) for employees after a period of employment, how do you ensure they are starting to receive those benefits once they become eligible? A great way to remedy this is to set up an effective date within your payroll software system, based on the parameters you set. That way, employees will start receiving benefits as soon as they are eligible.

Export a 401(k) file.

How do you send your 401(k) retirement plan administrator the data they need to manage your plan? Use your payroll software to track 401(k) retirement information, and generate a file right from your software to send directly to your retirement plan administrator. By generating and sending a file, you will eliminate the additional step of gathering/re-entering the information, which could result in manual entry errors. This will also save you significant time!

Show employees the value of your 401(k) program.

Offering a 401(k) program is a valuable employee benefit. Show your employer share of the 401(k) contribution on the payroll stub for employees to see, and they will appreciate each week the contribution they are receiving from you, their employer.

By using these steps, you will improve your 401(k) management, and also keep employees happy with this valuable benefit you are offering.