Cash is one of a company’s most critical assets. As such, proper cash flow management is key to achieving greater growth or, at the very least, keeping the business stable and preventing it from closing down. In a traditional company setting, cash flow management is less complicated and easier to handle. However, the same cannot be said for e-commerce businesses.
There are more factors to consider in the digital space, such as different payment processors and multiple sales channels. Moreover, e-commerce businesses are more likely to deal with unforeseen issues, like sporadic sales and problems with their supply or delivery. Nevertheless, they are still faced with steady expenses, including employee wages and rent. This is why it is crucial for e-commerce business owners to monitor their cash flow closely to ensure they always have sufficient cash to keep their business moving forward.
If you are an owner of an e-commerce business who is concerned about keeping track of your company’s cash flow, let us share three useful cash management tips to help you get your money right.
1. Have a proper bookkeeping system in place
Keeping accurate and proper records of your business transactions serves a multitude of purposes, enabling the organisation to prosper and fulfil its objectives. From making sound financial decisions to submitting precise tax filings, having a complete and immaculate record of your various transactions is the essential foundation upon which various business tasks depend.
If your business has grown to the point where it requires a dedicated and reliable bookkeeping system, perhaps it is time for you to consider outsourcing the task to a reputable accounting firm. At Ackenting Group, we provide fast and reliable bookkeeping and accounting services. Let our seasoned accountants provide you with timely updates on your financial reports so you can make sound business decisions knowing you have adequate cash to back them up. Furthermore, with our professional tax accounting services, you can rest easy knowing your company’s tax filings are accurate and comply with IRAS’s business guidelines.
2. Schedule your business expenses accordingly
Unlike conventional business models, e-commerce companies may not always experience steady sales. This instability makes it challenging for entrepreneurs to cover expenses since they may not have any revenue from sales yet. As such, you may want to consider scheduling your outgoing payments in accordance with your revenue. For example, you can consider negotiating with your suppliers to defer payment or reimburse them within 30 days of the delivery. If you usually experience higher sales volume towards the end of the month, you may want to consider scheduling your biggest expenses accordingly.
3.Find ways to make clients pay on time
Keeping track of your payment deadlines and ensuring your clients pay on time is key to successfully managing your company’s cash flow. While it can be beneficial to occasionally delay your client’s payments to maintain good business relations, you need to know when to stand firm and request reimbursement. By minimising payment delays as much as possible, your business remains financially stable.
Automating your payment process is the first step to ensuring clients pay on time. However, there is more you can do to persuade them to be prompt with their payment. For instance, you can set up a payment reminder system on your platform to send out notices for invoices that are nearing their due dates.
Maintaining a stable cash flow is critical for all businesses, and those in the e-commerce industry are no exception. Moreover, the e-commerce space presents unique challenges that make it tricky for entrepreneurs to track their finances. Therefore, it is best to monitor and keep track of your cash flow extensively to ensure everything is in order.
If you require any assistance on accounting services, feel free to drop us an email at email@example.com or contact us at +65-66358767. At Ackenting Group, we offer a complimentary 30 minutes online consultation for us to better understand your business requirements.