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Why Cash Flow Management Matters

01/13/2020 | By: Brink's Money

Why Cash Flow Management Matters

It’s an unfortunate fact about running a small business but if your company experiences cash flow struggles, chances are you will also experience struggles to stay open. In fact, a U.S. Bank study revealed that 82% of business failures can be attributed to poor cash flow management.

Brink’s Money understands the stressors that come with the inflow and outflow of cash for a business and we’ve worked hard for over 160 years to create the tools to bring efficiencies to your company so you can spend your time making money instead of managing it. 

Businessman conducting cash flow analysis for business growth

What is Cash Flow?

Before we can talk about how to manage cash flow efficiently, it's important to understand what we mean by the term “cash flow.” If you have experience with personal finances, it may be easiest to think of cash flow as a high-level overview of your business’s checking account where you monitor what money is coming in and what money is going out. The goal, of course, is to have more cash coming in (payments for services rendered) than you do going out (rent payments, vendor payments, payroll, etc.). 

Ideally, every company will successfully avoid having more expenses than revenue because that’s when your account is at risk of being overdrawn and it’s when most start-ups are forced to close their doors. To avoid this fate, be sure to focus on the “management” part of the cash flow management definition. 

What is Cash Flow Management?

Now that we know cash flow is about the give and take of various expenses and sales conducted, we can discuss cash flow management. Simply put, cash flow management is the practice of keeping track of and analyzing the impact any changes to the cash flow have made on the big picture of the company’s finances.

For example, did a part of your vendor payment process get automated? How does that positively or negatively impact cash flow? It should remove the risk of getting late fees that were previously incurred. Did a vendor change payment terms from Net 30 to Net 15? Will that payment be appropriately processed and approved with all other pieces of the flow taken into consideration?

Pros of Cash Flow Management

When you choose to focus on cash flow management, you build a sense of stability within your company, you remove any friction from processing payments that are made monthly, and you never have to worry about meeting payroll--even in the off seasons. 

Meet Payroll On Time, Every Time

Brink’s Payroll Debit Cards afford employers as much control as possible over when and how payroll is doled out. Our intuitive platform lets you control any changes or updates you need to make, as soon as you need to make them. There’s no calling a support center, no sending an email into the abyss of customer service to get help. You simply login to the portal, make the changes necessary, and within seconds of hitting “update” that change is actively reflected within the account and for the individual employees.

Show Stability to Employees

No matter the size of your business, if you have not previously paid attention to cash flow management as a part of your accounting or HR efforts, there can be a sense of dread or nerves as you get closer to payday. Will all the checks clear? Will you need to delay payment based on that one customer finally paying off their invoice? By knowing the ins and outs of your business’s cash flow patterns, you will know exactly where your money is coming from and where it is going.

When you use the Brink’s Business Expense cards for employee spending, you also get the insights, support, and infrastructure you need to stay on top of your company’s cash flow. Take your time back from chasing down receipts and invoices, and count on our platform to get you out from massive spreadsheets and back into how you can make the business even more efficient.

Avoid Lulls, Even During Off-Season

If you work for an industry that experiences seasonal lulls (think construction in the winter time, agricultural production in the off-seasons, etc.), meeting payroll as the temperatures turn or as the seasons change can be a true stressor. It’s hard to maintain a business through these slower periods, even when they are expected. 

Thankfully, you can rely on technologies, like Brink’s Business Expense to improve cash flow management through all seasons of the year. By analyzing how your company currently spends you can adjust budgeting to plan for slower production months, so those seasonal lulls don’t have to be as deep or as debilitating. 

Small Efforts, Big Rewards

The time to ignore the details of your business's cash flow patterns is long gone. By putting in a little effort up front, you can confidently create efficiencies that save your business money and help you get time back. 

Get in touch with Brink’s Money today to learn more about our employee pay card and business expense offerings. We can work with your company to reduce costs and gain operational efficiency while providing valuable benefits to your team.