How to use intelligent accounting to improve your cash flow position

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intelligent accounting for a better cashflow management

Most business owners will know about cash flow: it’s simply the money that flows in and out of your business. But maintaining healthy cash flow is far from simple. If you have more money going out than coming in, you’ll struggle to pay staff, suppliers, and operational costs.

Recent Xero research uncovered that UK small businesses are paid an average of eight days late. As many small business owners know, a single unpaid invoice can be the difference between settling your bills and shutting up shop.

And while you can’t always control when you get paid, there are certain skills and tools that can help you avoid a cash flow gap.

In this short guide, we explore why cash flow is so important, and how intelligent accounting software can help you maintain and improve your cash flow position.

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Why cash flow is king

When you have positive cash flow – more money coming in than going out – you can focus on growing your business instead of worrying about how you’ll pay the next bill.

Here are just a handful of the many growth opportunities available to businesses with positive cash flow:

  • Developing your products or services
  • Investing in marketing or advertising
  • Purchasing new equipment
  • Taking home a bigger profit
  • Investing in training for your staff
  • Building a buffer for uncertain times

When you have negative cash flow – more money going out than coming in – it stops you investing in your business. Eventually, negative cash flow can force some businesses to stop trading altogether. Nearly one in 10 business owners say late payments (which can push businesses into negative cash flow) threaten the viability of their business.

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Of course, you can’t control when disaster strikes. But with the help of intelligent accounting software and cash flow software, you can build a robust strategy for managing your cash flow.

Maintaining a healthy cash flow demands that you keep on top of your day-to-day bookkeeping. By regularly reconciling business transactions, you gain access to live information about your finances. This data can then be used to conduct a cash flow analysis or create a cash flow forecast. Let’s explore this in the next section.

How can intelligent accounting software help with cash flow?

Your cash flow position changes every time money flows in or out of your business.

So access to live, accurate data is essential when you’re making financial decisions. Intelligent accounting software brings all of your financial information into one clear view. This makes it easier to spot an upcoming gap in your cash flow. Financial insights aren’t trapped in paper invoices or unopened bills – they’re available for you to see.

By using the data in your accounting software, you can automatically generate a cash flow statement too. This will show all of your income and expenditure for a specific date range – a month, a quarter, or a year. Here, you’ll be able to see how much available cash you have at the end of each period. And it can all be done at the touch of a button.

Here are some more benefits of using accounting software to help with cash flow.

You can:

  1. Reconcile bank statements in a flash, with live bank feeds that automatically import your transactions
  2. Create more accurate cash flow forecasts with access to real-time, reliable data (try the Agicap integration for Xero, and unlock cash flow monitoring and scenario planning functionality)
  3. See all of your business income and expenditure at a glance, with easy-to-read dashboards
  4. Invoice quickly and automate late payment follow-ups, so you can prioritise getting paid
  5. Compare your budget to your actual cash flow and see how your finances are faring, with a library of reporting options in Agicap
  6. Choose the right time to spend or save, by compiling and comparing financial reports

Tips for improving your cash flow with intelligent accounting software

As outlined above, there are plenty of accounting software features that can help you keep track of cash flow. But what about tips for improving cash flow with accounting software? Consider these steps:


Using accounting software, you can import live bank feeds so that transactions can be reconciled quickly.

Doing regular bookkeeping means any reports or forecasts you produce with software will be based on current data – so you can see exactly where your money is, and where it’s going.

You can also automate invoicing and payment reminders. Set up recurring invoices, so there’s no risk of them being left unsent. Automate late payment reminders so suppliers and clients get a nudge to settle the bill.

The biggest benefit of automation for cash flow is claiming back some time to work on the strategic aspects of your business.

Reporting and forecasting

Cash flow reports and forecasts are only useful if they’re created with reliable data.

With your bookkeeping up to date, you can generate accurate cash flow projections and reports in a few clicks. And if you want to test the resilience of your business and cash flow, the Agicap integration for Xero can give you even deeper insights.

Use the scenario functionality to compare different financial situations and test how your cash flow could look in the future. You can also look at short, medium, and long-term cash flow projects so you know what’s coming up in the weeks and months ahead.

Keep cash flow front and centre

Your cash flow position could look dramatically different from one moment to the next.

That’s why access to a live dashboard that gathers all of your business income and expenditure is essential. With the Xero Go and Agicap mobile apps, you can keep track of your accounts from anywhere and enjoy cash flow clarity at all times.

Start improving your cash flow management and build a healthier business. Try the Agicap integration for Xero today.

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