18 Feb What is the Importance of Cash Flow and How to Get Paid Faster?
What is the Importance of Cash Flow and How to Get Paid Faster?
Many of startups and small businesses owners asked, “What is the importance of managing cash flow?”. But first, let’s understand….
What is cash flow?
The simple answer is cash flow is the total amount of incoming money VERSUS total amount of money spent. Think about travelling a long journey with your lovely car: petrol (money received) is one of the key resources for you to ignite your engine and start your journey. While consumption of petrol slowly will be like spending your available cash from time to time.
Why cash flow is important? Can you imagine that while you are driving half way, a petrol station icon with yellow colour signal appeared in front of you in driving seat. It’s time to refill your petrol! Else you will not reach your destination.
Same as your business, you need consistent cash inflow to sustain and grow your business while spending on necessary expenses.
What is the importance of Cash Flow to your business?
Cash inflow is the lifeblood in any small business and growing business in Malaysia.
Consistent cash inflow enables a business to reinvest into businesses for growth; maintain high credit rating with paying suppliers on time; business acquisition; survival during economy downturn; financial planning etc.
Some of our clients faced huge challenges in their businesses when their customers fail to pay them on time and some even dragged the payments for more than 3 months.
At the same time, administrative works have increased from time to time for chasing payments.
While business owners are too focusing in business growth, they might miss out the importance of their business accounting as well as accounting processes. Therefore, they are not able to view the status of their business’s Profit & Loss accounts & Balance Sheet in real-time for making better decisions.
Now, there is an awesome solution for businesses like subscription services, an on-demand marketplace, e-commerce business, or a crowdfunding platform.
Here is the good news for Malaysian!
Co-founder of Stripe, Patrick Collison has announced in Twitter that Malaysia is one of the 6 new countries that Stripe kicking off with the beta version.
What is Stripe?
Stripe is an Online Transaction Company which helps internet businesses in collection of payments from customers with their debit or credit cards and other payment methods. They are handling billions of dollars every year for forward-thinking businesses throughout the world. Currently they are serving 23 countries and they have requested an invite to collaborate with a total of 9 countries which are Malaysia, India, Mexico, Poland, Brazil, Estonia, Lithuania, Greece and Latvia.
For Malaysia, it is an indication that internet or online businesses will be growing faster with a better cash inflow through Stripe platform.
How to get paid faster with Stripe INTEGRATED with a Cloud Accounting Software – Xero?
Integrating both of Xero and Stripe may make your dream comes true – wish your customers could pay you on the spot?
- Add Stripe to Xero
Connect your Stripe account to Xero in few clicks.
- Send your invoice
A PAY NOW button will be enabled on next online invoice sent to your customer, you customers may pay easily with their debit or credit card
- Manage payments
To select who carries Stripe processing fee and how often payments will be transferred into your bank account
- In sync with Xero
Manage your Stripe fees automatically.
Why Accounting is vital in every business?
In accounting, financial statements are the key tools for business owners or investors to know-your-business-better, and it consists of 3 main components: Profit & Loss Account, Balance Sheet and Cash Flow Statement. Let’s understand both of it a little bit more!
Profit and Loss Account assists business owners to determine the performance of their business. It shows the profitability of a business for a certain period (e.g. annually, quarterly or monthly). Business owners can review and evaluate how their business perform through each item in Sales, Cost of Goods Sold and Expenses. Better understand about it will enable business owners to have a better control of their business.
Cash flow statement shows the accumulated financial information about all cash inflows a business received from its daily operations and external sources of investment, versus all cash outflows that spent on business activities and investments during a certain period.
Balance Sheet, also known as “Statement of Financial Position’ tells about a business’s assets, liabilities and net worth (the owners’ equity). It is vital to know reading balance sheet in the right way and how it is structured.
Therefore, it is vital that a business should have a great accounting software to generate all these reports. On the other hand, business owners should also consider about how to operate their business efficiently by using the right software and tools which are able to streamline their business processes. In a long run, business will be saving a lot of costs from making your business processes simpler and easier for you and your team.
Here, introducing you the beautiful Cloud Accounting Software for Malaysia small and growing businesses – XERO.
What is Xero?
Xero is online accounting software for small and growing businesses in Malaysia. They have over 1 million subscribers in 180 countries currently.
Xero has partnered with CIMB Bank, direct bank feeds – an automatic flow of CIMB Bank Transactions into Xero that saved time in getting your accounts done. Other banks like Public Bank and Maybank is also able to be logged into Xero.
We specialize in implementing Integrated Cloud Solutions and Cloud Accounting Services. And every cloud solution we are promoting, has been implemented either in our own practice or beloved clients.
If you would like to know more about how CALTRiX can improve your business efficiencies, please contact us via email firstname.lastname@example.org or call/Whatsapp to +6 013 – 725 3131