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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 help 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 digital wallets — you make it more convenient for everyone.
Tools:
Wells Fargo Merchant Services offers a variety of payment processing options. Accept card payments — onsite, online, or on the go — and get paid fast, as soon as the next business day.,
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. 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 offers you a simple way to pay for everyday business expenses while earning rewards. It’s a smart alternative to checks and cash. 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 offers a flexible, revolving source of funds typically 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.
Resources for Small Business
Use this interactive tool to develop your business plan today.
You may settle your Merchant Services funds to an account at the financial institution of your preference. When you use a Wells Fargo account for settlement or other Merchant Services purposes, you must use a Wells Fargo business deposit account.
When depositing into a Wells Fargo business deposit account. Please refer to the Merchant Services Terms and Conditions and Operating Rules or Program Guide for additional information.
Mobile deposit is only available through the Wells Fargo Mobile® app. Deposit limits and other restrictions apply. 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. See Wells Fargo’s Online Access Agreement for other terms, conditions, and limitations.
After payee is validated, payments scheduled on a business day by 3:00 pm Pacific Time can be received as soon as the following business day provided you have sufficient funds in your account.
Sign up may be required. Availability may be affected by your mobile carrier's coverage area. Your mobile carrier's message and data rates may apply.
Information and views provided are general in nature and are not legal, tax, or investment advice. Wells Fargo makes no warranties as to accuracy or completeness of information, including but not limited to information provided by third parties; does not endorse any non-Wells Fargo companies, products, or services described here; and takes no liability for your use of this information. Information and suggestions regarding business risk management and safeguards do not necessarily represent Wells Fargo’s business practices or experience. Please contact your own legal, tax, or financial advisors regarding your specific business needs before taking any action based upon this information.
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