A lot is said about new technology, the change it brings and the pace of that change in the modern day; but one thing will always remain the same: cash is the life-blood of any business. For many farming businesses, managing cash flow is only done if requested by the bank manager. However, these days cash flow management is a crucial part of managing every farming business. Modern technology can help the business understand and manage their own cashflow very simply.
UNDERSTAND YOUR CURRENT POSITION
Being on a cloud accounting platform grants you a much easier way to understand your existing cashflow situation as reporting can be done on a real-time basis, and crucially shared as well between the parties involved – be it the bank, your consultant or accountant. It is therefore important to put time in to setting up the reports you need from your system – do you have a lot of accounting adjustments to be made each quarter on your profit and loss, or can you rely on the system to run a cash-transaction based profit and loss and use this as a basis for understanding your cashflow? You might want to set a few key performance indicators (KPI’s) if you’re looking to improve your cashflow situation too. Cloud accounting systems can help you monitor this, and even perform basic invoice-chasing to drive the debtor days down, link to online payment systems to help you collect cash; and allow you to plan supplier payments too.
Just as cloud accounting packages will lead you to generating real-time management information, it will also give you the ability to cast expectations ahead and create financial forecasts with ease – and again be able to present these and share among all parties simply. The different packages, of course, all have different in-built tools, for example, Xero’s Budget Manager allows you to create forward-looking budgets for different departments or scenarios, but there are also additional apps that can link to many of the cloud accounting platforms. Even if you want to keep things simple and piece together a forecast yourself in a spreadsheet, this is done effortlessly if your records are easily available in your cloud accounting system and exportable into your spreadsheet directly.
TAP INTO THE EXPERTISE YOUR ADVISORS CAN GIVE YOU
Whatever stage you are at – we can be there to help you: outlining your first business plan, establishing what funding you might require and forecasting this out, helping you approach lenders and assisting with your applications, and all the onwards monitoring that will keep you on top of your business and flourishing – we have the expertise that can help.