cash flow

Getting paid on time

6 Ways to Improve Cash Flow by Managing Receivables

Need to forecast and improve your cash flow? All businesses should carefully monitor their cash position.

Healthy cash reserves enable investment in growth, allow distributions to owners or – for some businesses – can be a matter of survival. In any case, cash management is critical.

One way to improve the cash position is to carefully manage Accounts Receivable (or collections). Here are some Best Practices which can positively impact the cash position.

1. Set weekly cash collection targets

Accounts Receivable (AR) management is an important business process and clear targets should be set. Short-term targets help you chip away at the larger AR balance. These targets can be increased or decreased depending on your cash requirements and the total AR balance at any time.

2. Improve the invoicing process

It’s difficult to maintain a low AR balance when invoices are sent late or contain errors. Also, an overdue invoice should immediately trigger follow-up actions, signalling to your customer that you are serious about collecting your cash on time.

3. Make getting paid easy!

Give multiple payment options and make payment as convenient as possible so there can be no excuses. Online payment options are increasingly popular in most industries.

4. Offer discounts for quick payments

This lets the customer know that you value getting your cash on time and offers an incentive for them to pay you fast.

5. Stay in touch with customers (especially regarding the state of their business)

Business conditions are always changing. Hopefully, things improve… but some customers will encounter difficulties which compromise their ability to pay you. Early warnings help you take appropriate action, but this requires you to stay in touch with customers.

6. Prioritise customers with large AR balances

Your Accounts Receivable process should prioritise customers where returns will be greatest. That doesn’t mean you neglect the others… but recovering a large debt will have the biggest impact on cash AND increase team morale!

Success in Accounts Receivable management comes from building systems and implementing them consistently. That’s better than waiting for the AR balance to spiral out of control… and then trying to fix things. A few small steps can make a big difference to cash… so why not get started?

Need to forecast and improve your cash flow?

Do you never have enough money for wages or BAS payments? Are you always wondering where your profits went? It’s no secret that failure rates among Australian small business is high and about half of corporate insolvencies are the result of inadequate cash flow or high cash use and trading losses. The professionals at Notch Above Bookkeeping can assist with cash flow forecasting for your business. We will help you understand the cash flow requirements of your business. Contact our Xero Certified Bookkeepers Australia-wide on 1300 015 130.

Artificial Intelligence AI

Navigating Artificial Intelligence

How small businesses are navigating AI

The hype around artificial intelligence (AI) is making small businesses feel that its development and adoption are moving at lightning speed.

Curiosity outweighs concerns

Even with ethical concerns in the frame, and with AI tools becoming more easily accessible, small business owners want to be proactive and stay ahead of the curve. New Xero research found that globally, 32% of businesses are experimenting with AI tools, and 21% are investing in them. The results also showed:

  • one in five small businesses were dedicating more resources to AI
  • more than half (51%) said they trusted AI tools with identifiable customer information
  • 45% of respondents said they would trust AI tools with sensitive commercial information

In fact, new Xero research shows that 80% of small business owners globally are concerned that the fast pace and nature of AI are leaving regulation in the dust. They told Xero they want governments to do more, given the potential big impact on industries and the workforce.

Xero launched their Future Focus research on AI at Xerocon Sydney this year, taking an in-depth look at how 3,000 small business owners from across Australia, New Zealand, Canada, Singapore, the UK and the US feel about AI and the potential impact on their business.

Mixed feelings about research findings

So, what did the research say? In a nutshell — small businesses have mixed feelings about AI. They’re curious and excited, but there’s also concern about ethical implications and data privacy.

Almost a third (32%) of small businesses are intrigued about AI, while others are feeling anxious (31%) and excited (30%). Half of small businesses believe AI will be more helpful and have a positive impact on their people, processes and workflows, compared to 20% who said they believe it will be more harmful.

Sensitive information disclosure (41%) and data privacy violations (41%) were considered to be the biggest ethical challenges relating to AI use in their business. Some (38%) respondents were also concerned about the ethical challenges around worker displacement that could be caused by AI utilisation.

The challenges of using AI

While AI has piqued the interest of small business owners, it’s not the top priority for small businesses just yet. Only 8% of respondents ranked adopting or investing in AI as their number one priority over the next 12 months.

In terms of the small businesses that are already using AI, 69% are reporting some drawbacks, and 23% have seen increased security or privacy issues since using generative AI tools. These drawbacks included:

  • increased biases or inaccuracies in content (18%)
  • decreased employee morale (18%)
  • decreased efficiency due to time overseeing the quality control of AI content (16%)
  • reduced headcount (14%)

While reduced headcount can be seen as a drawback, it can also support small business owners to be more efficient and save on costs. Though 59% of small business owners said they don’t see their hiring plans changing over the next three years, a third (31%) said they plan to hire fewer people.

A reminder to use data responsibility

The interest in generative and predictive AI is understandably driving curiosity among small businesses. But if exploration of this technology leads to sharing personal identifiable information, that could put their customers’ data at risk.

Because of how important protecting sensitive data is, Xero has had, for many years now, responsible data use commitments that guide them as a business, and help support Xero customers as they navigate their own data use.

Xero also announced a number of new, exciting AI-powered features and generative AI experiments at this year’s event.

Considering Xero for your business? Notch Above Bookkeeping’s Xero Certified Advisors are here to answer any questions or to help your business upgrade to or optimise using Xero. Contact us on 1300 015 130.

Source: Xero