How to Create an Accounting Workflow That Will Increase Your Cash Flow

Running a business means you are constantly running around doing everything in your business. That's what CEO stands for – Chief Everything Officer. In order to manage it all you need to have a workflow within every department; not just your operations.

That is where many business owners fail. They create processes around their main product or service, but fail to create process around their human resource department or finance department, just to name a few.

Well you have to have processes around every aspect of your business in order to ensure that it will run smoothly. Systems are what will keep your coming running smoothly and also allow you to scale.

Just because you may be a one man or two man show does not mean you don't need processes. That's when you need them most so that you can stop feeling like you created a job for yourself and begin to enjoy your life and business together.

Here are sample workflows for your Accounts Payable and Accounts Receivable processes that you can implement in your business. Both of these samples can be tweaked to your business and your model.

Accounts Payable Workflow

Now that your business is going it's time to pay some bills. They are coming in the door like ants on a rainy day. How do you manage them all and your cash at the same time?

  • Establish a plan on how you will pay your bills. This plan, or pay cycle, can be weekly, bi-weekly, bi-monthly or monthly. We suggest bi-monthly or monthly. This is so that you can have cash on hand for other impromptu expenses that may come up in your business. Whatever pay cycle you chose, you MUST stick to it NO MATTER WHAT.
  • Now once you receive the bills and input them into your accounting system. Be sure to include the invoice number on the bill and the due date.
  • Scan the bill into your document management system then shred the original.
  • Two days before your next scheduled pay cycle run, review your list of payables and determine which bills you will pay in this cycle and which ones have to wait.

Accounts Receivable Workflow

Once you or your sales team meets with a prospective clients and secures the deal, how do you get the ball going so you can ensure that everyone understand the scope of work and that you get paid for your services.

After the client has agreed to hire you, depending your service you may create an invoice on the spot or you may generate an agreement to be sent by the end of the day. Let's look at both scenarios.

Client pays immediately.

  • Using your accounting software through the mobile app or the internet, you can create an invoice immediately and send electronically.
  • Client signs invoice and pays deposit through your merchant server provider.
  • Accounting software generates immediate receipt and emails it to the client.

Client pays later.

  • Create agreement and send electronically for signature.
  • Client signs agreement.
  • Using your accounting software through the mobile app or the internet, you can create an invoice immediately and send electronically.
  • Collect deposit or payment through your merchant server provider.
  • Accounting software generates immediate receipt and emails it to the client.

Invoices for billing should be sent out once or twice a week, depending on your business model. Whichever method you use, stick to it CONSISTENTLY. This consistency will help you better manage your cash flow.

Related posts

Leave a Comment