Financials and Cash Flow

Manage how you receive and make payments to improve cash flow

Considering ways to improve your cash flow? Review your options.

Published: June 11, 2018

If you’ve ever noticed a disconnect between your company’s bank account and its balance sheet — namely, that you’re short on cash even though sales are healthy — then you’re familiar with an imbalance in cash flow. The financial health of a stable business can depend not only on strong revenue, but also on optimized cash flow: arranging for the timely receipt of your receivables, as well as the strategic payment of your expenses.

Fortunately, there are some steps you can take to minimize cash crunches. Here are a few tips that can help you better manage payments and your cash, and some tools from Wells Fargo that can help you put them into practice.

1. Get paid faster.

This sounds obvious but can be difficult to achieve. Make it easier for customers to pay you more quickly. For example, one of the slowest means of payment is for a client to mail you a check. Not only is it slow, but also it’s not particularly efficient for either party. By offering enhanced point-of-sale options for customers — payment via credit or debit card, and mobile wallets — you make it more convenient for everyone.

Tools:

  • Wells Fargo Merchant Services offers next-generation point-of-sale solutions that can help you accept a wide range of card payment options and also offers you next-day access to funds.1

  • Wells Fargo Mobile® Deposit allows you to deposit checks using your mobile phone, speeding up the process on those occasions when you’re still paid with a check.2

2. Pay your bills on time — but not too early.

The instinct to pay your bills immediately upon receipt shows good discipline, but can put your business in a bind by unnecessarily tying up your cash for days. By paying bills closer to when they’re due, you may be able to better control day-to-day cash flow.

Tools:

  • Wells Fargo Business Bill Pay allows you to schedule your payments. That way, your bills are set up for a future payment immediately after receiving them, while still maximizing the period during which you control your cash.

  • Direct Pay allows you to make secure electronic payments to your employees, contractors, and vendors — as soon as the next business day.

3. Manage cash crunches due to expenses.

It’s not uncommon for businesses to run short on cash from time to time. Both significant purchases and everyday expenses can strain your cash flow. Rather than run your accounts to zero, consider turning to your bank for a credit card or line of credit.

Tools:

  • A Wells Fargo Business Credit Card gives you an easy way to pay for everyday business expenses while earning rewards. It’s a smart alternative to checks, cash, and personal credit cards. You can also make the grace period (the time between the end of the billing cycle and the payment due date) work to your advantage.

  • A valuable supplement to a business credit card, a Wells Fargo Business Line of Credit provides a flexible, ongoing source of funds with a higher credit limit and lower interest rate. Use the funds to help supplement cash flow, take advantage of unexpected opportunities, expand, or cover expenses.

4. Track account balances with online and mobile banking.

An account with online and mobile access can be key to a solid cash flow management strategy by helping you track your cash as it moves in and out of your account.

Tools:

  • Set up alerts through email, text, or push notifications that can help you monitor your account and keep you on top of your spending. There are alerts that can notify you if an account balance falls below an amount you set, purchases go over a limit you specify, and more.

  • Integrate your accounting software, like QuickBooks® and Xero’s services and products, online with your Wells Fargo business accounts to help you manage your business finances in one place.

It’s also important to create and review foundational documents such as a cash flow forecast and cash flow statement to successfully manage your business’s cash. Consider working with your business banker or accountant to strategically document your cash flow ebbs and flows.

 


1 On most transactions when settling to a Wells Fargo Deposit Account. For American Express® and Discover®, next-day availability is only available for full-service transactions (i.e., the authorization, processing, and settlement are performed through Wells Fargo Merchant Services).

2 Some accounts are not eligible for mobile deposit. Availability may be affected by your mobile carrier’s coverage area. Your mobile carrier’s message and data rates may apply.

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