Cash is the life force that propels small businesses forward. It’s the financial fuel that allows businesses to settle bills, invest in expansion, and navigate through economic turbulence (cost of living, anyone?). However, managing a robust cash flow can be a daunting task, particularly for small businesses. Fortunately, the digital age offers a lifeline. Xero, a top-tier cloud-based accounting software, coupled with its integrations like Chaser, GoCardless, Crezco, and Stripe, can significantly boost cash flow for small businesses. Here’s an exploration of how this works:
Optimize Your Accounting with Xero
Xero is a powerful tool that demystifies accounting tasks, making it more manageable for small businesses to oversee their finances. It offers a real-time snapshot of your financial status, empowering you to make data-driven decisions. By automating tasks such as invoicing, bank reconciliation, and expense claims, Xero not only saves you time but also minimizes the likelihood of errors, which can contribute to a healthier cash flow.
Invoice Regularly, and Automatically
This might not lend itself to all trades, but where possible businesses should invoice regularly. Invoice for deposits up front, get staged payments for bigger jobs and collect cash as you do the work. If you invoice fixed amounts in each billing period, use the Repeating Invoice function in Xero to automatically create and email invoices to your customers on a set cycle.
Streamline Payments with GoCardless
GoCardless is a direct debit provider that seamlessly integrates with Xero, enabling businesses to collect recurring payments directly from customers’ bank accounts. This eradicates the need for manual payment processing, reduces the chances of late or missed payments, and ensures a more consistent cash flow. Once your customer signs up, GoCardless will automatically collect the money from their account on the Due Date you set on the invoice in Xero. Then two days later (for GBP payments) the money gets paid into your account. Where this really helps is when you combine it with repeating invoices in Xero. The invoice goes out and payment get collected each month, and leaves you better able to plan knowing what cash you are going to receive each month.
Regular Statements to Debtors with Xero
One great feature of Xero is its ability to send out regular statements to debtors, detailing the invoices they have outstanding. This feature is crucial in reminding your debtors about their pending payments. It serves as a gentle nudge, letting them know that you haven’t forgotten about the invoice. This can prompt them to settle their bills promptly, getting cash into your business quicker.
Enhancing Debt Recovery with Chaser
If you want a more full-blown credit control solution than just sending out customer statements, Chaser is the answer.
Delayed payments can have a detrimental effect on a small business’s cash flow. This is where Chaser steps in. Integrating with Xero, Chaser automates your accounts receivable process, dispatching courteous, consistent reminders to customers about impending payments. This not only accelerates the payment process but also liberates your team to concentrate on other tasks, thereby boosting cash flow. It also offers a very handy “escalation” feature whereby the reminder email start to go out from more senior staff if the customer fails to pay after the first few reminders.
Cutting Transaction Costs with Crezco
Crezco is a payment platform that enables businesses to accept payments directly from their customers’ bank accounts, circumventing card networks and evading transaction fees by harnessing the power of OpenBanking. This can lead to substantial savings, especially for small businesses operating on tight margins. Crezco’s integration with Xero ensures that all transactions are automatically recorded and reconciled, further streamlining your accounting process. Crezco also offers a number of paid-for features to help facilitate paying your own suppliers and collecting cross-border payments.
Facilitating Instant Payments with Stripe
Stripe is a card-payment processing platform that integrates with Xero, allowing businesses to accept credit and debit card payments online. With Stripe, you can provide customers with a convenient payment method, which can result in faster payments and enhanced cash flow. Stripe’s integration with Xero places a payment link directly on the invoice and helps ensure that transactions are automatically documented, saving you time and guaranteeing accuracy.
Managing Creditors with Xero
Managing cash going out of your business is just as critical as managing cash coming in. In addition to managing debtors, Xero also offers robust features for managing creditors. It provides a clear and comprehensive view of all your outstanding bills and their due dates, helping businesses to plan their payments strategically. By keeping track of all your financial obligations in one place, you can prioritize payments based on their urgency and your available cash flow. This proactive approach to managing creditors can help avoid late payment penalties, maintain good relationships with suppliers, and ultimately contribute to a healthier cash flow. With Xero, businesses can ensure that they are not only collecting payments efficiently but also making payments in a timely and organized manner.
Predicting Future Cash Flow with Syft Analytics
Syft Analytics is another powerful tool that integrates seamlessly with Xero, offering advanced financial analytics and reporting. One of its standout features is its ability to predict future cash flow based on historical data and current trends. By using Syft, businesses can gain insights into their projected income and expenses, allowing them to plan and make strategic decisions accordingly. This predictive analysis can help businesses anticipate potential cash flow issues before they arise, enabling proactive measures to mitigate risks. With Syft Analytics and Xero, businesses can move beyond just tracking their cash flow to accurately forecasting it, providing a more solid foundation for financial planning and decision-making.
What are you waiting for?
In summary, small businesses can leverage Xero and its integrations to optimize and automate their accounting processes, enhance debt recovery, streamline payments, and cut transaction costs, all of which can lead to improved cash flow. It’s about being more efficient, not just working harder, and these tools provide the means to achieve this.
