Cash flow is the movement of money in and out of a business, representing the operating activities of a company. Examples of cash flow include receiving payables from clients for goods or services rendered, paying creditors or suppliers, disbursing wages and salaries to employees, investing in new equipment or property, taking out a loan, and receiving dividends from investments or interest earnings. A good gauge of cash flow is reflected in your monthly bank statements. You want to make sure to have enough money coming in to meet your existing financial obligations, as well as planning for the future.
Around 60% of small business owners say that cash flow has been a problem and with 89% of them saying these problems have had a negative impact on their business1. Cash Flow tracking is key to balancing your inflows and outflows of liquid cash, to ensure the smooth day-to-day management of your business.
Cash Management is the foundation to your company’s success.
An easy way to improve your cash flow includes “speeding up” the collection of receivables (inflows) by negotiating shorter payment periods with clients. Alternatively, “extend” the cycle for payables by automating payments to vendors/ suppliers (outflows) to have better control on timing.
By managing your cash flow cycle, your business increases operating efficiency and ultimately the ability to capitalize on dividend or interest earnings on excess cash balances. Using Cash Management services such as ACH Origination, Remote Deposit Capture, Online Balance Reporting and Fraud Prevention tools can also aid in better money management.
It’s important to be connected to all bank accounts balance reporting, loans, and investments on a daily basis in order to track cash inflows and outflows. Ask yourself this - approximately how much money do I have in all of my financial accounts combined? On average, consumers own 5.3 accounts across all types of financial institutions2. If you have multiple bank accounts with multiple financial institutions, managing your cash flows could be challenging.
Consolidating your banking relationship and financial accounts can make cash management simpler and more convenient. By trimming down the number of accounts and financial providers, you may get a better handle on your cash flow with less effort and room for error. When your banking relationship is centralized, transferring money from your checking to your savings account or making loan payments all in the same place will ensure faster processing and better oversight.
CNB offers a number of checking account options that provide the tools necessary for convenient, efficient cash management.
While assessing your cash flow and financial relationships, consider interest rates, returns on investment, and fees. Where can you optimize your earnings and minimize your expenses?
Relationship Pricing is a pricing and billing structure, where deposit and loan pricing is determined based on a business’s overall financial picture, rather than the financial institution proposing on an account-by-account basis. Commercial checking and savings accounts may have required minimum balances or transaction requirements and when you have multiple accounts at several financial institutions, fees can add up. Consolidating your accounts into one financial institution can reduce the number of fees you may be paying. You also might qualify for lower rates on loans or higher rates on savings accounts when all your cash is under one roof.
As your business continues to grow and prosper, CNB can assist with all your cash flow needs. CNB Cash Management solutions can help your business transfer funds smoothly between accounts, speed up your receivables, help you control your payables and structure accounts to earn interest income or pay down loans with your excess balances. We are always available for the opportunity to review and offer suggestions to help you and your business meet your banking goals.
To discover all the benefits of a CNB Business Checking Account and CNB Cash Management solutions, visit CNBank.com/Business today!
This material provided by Bethany Arnold.
1. https://quickbooks.intuit.com/r/payments/state-of-payments-cash-flow-2021/
2. https://www.paymentsjournal.com/how-many-bank-accounts-do-consumers-have/