How to manage cash flow with corporate credit cards?
It’s no secret that cash flow management is important to any business. Maintaining good cash flow, after all, could be the difference between making it or breaking it, especially when you’re running low on cash inflow.
However, knowing how to manage cash flow is easier said than done.
Luckily, there are some strategies, like using corporate cards, that you can implement within your business. Manage cash flow with corporate cards to get better budget tracking and control your expenses.
What is cash flow management?
Your cash flow is made up of two parts; cash inflow and outflow. Ideally, you want your cash inflow to be higher than your cash outflow to maintain a positive cash flow. Negative cash flow would mean that you’re strapped for cash, resulting in some difficulties with our payouts.
While it can be a challenge to ensure that you have more cash coming in than going out of your business, it is doable when you have a good cash flow management process established. This entails processes like bookkeeping, tracking financial records, paying all your bills on time, and many more.
Suggested read: What is net cash flow and how to calculate it?
Why is cash flow management important for a business?
To get a clear view of your spending
It’s not uncommon for business owners to lose track of their expenses, especially when they don’t have a clear expense management workflow in place.
This is, however, fatal in the long run. One of the reasons why it’s so important to know how to manage cash flow is to make sure this doesn’t happen.
When you’re keeping track of your records and managing what your cash situation is like, it’ll become easier to get full visibility of your spending. You’ll know whenever cash goes out of the business and how much you’re shelling out.
Helps in financial planning
The last thing you want is to come across an emergency situation that requires a lot of funds only to find out that you don’t have the money that you need.
By ensuring that you are managing your cash flow, you can plan your business finances better and budget for different situations that may require extra attention.
Know all the ins and outs of where your money is coming from and going to and get good cash flow management with corporate cards.
The tracking and budgeting that you get from using corporate cards are bound to help with financial planning.
Helps in the growth of business
The bigger your business grows, the more sources of income and vendor expenses you will have.
While having a quick and general overview of how much you’re making and spending each month may be enough in the early stages of your business, it’s not sustainable in the long run.
Not only do you not want to lose track of all your income and expenses, but knowing these details is also useful when you’re trying to decide which direction you want to go with your business.
It’s easier to pinpoint where your business is strong and what weaknesses you need to cover.
Maintain better relationships with vendors
The best way to maintain good relationships with your vendors is to ensure that you’re making all your payments on time.
When you manage cash flow with corporate cards and track your expenses, the likelihood of you making any late payments decreases.
You could even take it a step further. Keeping your cash inflow in mind, you could pick prime times for making early payments to your vendors.
Not only will this guarantee that you have good relationships with them, but it also boosts your chances of getting discounts for paying early.
Expand businesses
A big advantage to knowing how to manage cash flow is that naturally, expanding your business will be easier. It’s not just that you can determine where the best direction to grow will be, but you’ll also be better prepared for it.
Should a time-sensitive business opportunity arise, for example, you won’t have to worry about scrounging up cash to make the most of it.
The goal is to manage your cash flow well so that at any given time, you’re not tight on cash but also using your cash effectively.
Related read: Trade receivable - What is it & how does it work?
How to manage cash flow in an effective way?
Keep your accounting and bookkeeping updated
As accounting and bookkeeping are essential to any business, it’s important that you make sure you stay on top of all your accounting information. Managing your cash flow will feel like an impossible task if your accounting and bookkeeping aren’t updated.
Be sure to keep your records updated and don’t fall behind on it. The more you fall behind on your accounting records, the harder it will get to track where your cash came from and went.
You want to have the most updated and accurate information you can possibly get.
Create cash flow statements regularly
The best way to manage cash flow, with corporate cards or otherwise, is to ensure that you are tracking your cash flow every month. Make use of cash flow statements to do this.
You should create a cash flow statement at the end of every month to keep track of what your cash inflows and outflows look like.
It enables you to see if there are any sudden changes in your cash flow, which means you can strategize better. You’ll also have more accurate cash flow forecasts this way.
Observe cash flow
It’s not enough to simply create cash flow statements. You need to observe and analyze your statements to get better insights into what your cash flow looks like.
In fact, it’s a good idea to observe your cash flow even before you generate statements at the end of the month. This is especially a good idea during the slow months when you have to be more careful with your cash outflow.
Making sure that your cash outflow is proportionate to your cash inflow can be the key to staying afloat in difficult times.
Identify the expenses
You want to identify both your existing and upcoming expenses. It’s likely that you will have some amount pending in accounts payable, which you need to take into account when you’re trying to manage your cash flow.
When you have a clear list of what all your expenses are, you can identify which ones are the major expenses that you have to prepare for. You’ll be able to budget and make sure that you have cash on hand for any expenses, as well as see what the big spends were in the past.
Review and eliminate unwanted spends
You may have identified where your money is going and realized that you have more expenses than you thought you would. This is why you should regularly review your monthly expenses and see if there is any that you can cut back on.
By monitoring your expenses regularly, you’ll be able to pinpoint which transactions are no longer necessary for your business.
Old subscriptions, for example, may still be paid regularly even if you’re no longer using the product. Make sure that you review them and axe the ones you don’t need anymore.
Have emergency funds to support
No matter how much you prepare and forecast, you may still come across unprecedented situations and unforeseen emergencies that you can’t fully plan for.
The next best thing you can do is ensure that you have emergency funds in case those situations arise. While you want to invest your cash back into your business and not leave too much sitting around, you never want to be entirely out of cash.
Outside of budgeting for your business expenses, make sure that you have some cash ready for emergency situations.
Get your invoices cleared on time
One or two late payments may only cost you a small fee, but you don’t want to be constantly making late payments. These fees will slowly but surely add up over time. You’ll also be glad to clear your invoices and get them out of the way.
Make sure that you keep track of when your payments are due and clear them as soon as possible. You could also get discounts from different vendors if you make early payments, which you could plan for and take advantage of when you manage cash flow with corporate cards.
Regular reporting and forecasting
Making it a habit to regularly generate finance reports is necessary for any business. Not only will it be helpful in the present to keep track of your money, but it will also make doing business and expanding your company easier in the future.
Along with reporting, you should also use those reports and analyze them to make forecasts. Study your data and create a cash flow forecast for the coming months, which will help you budget better and ensure that you have good cash flow management for the future.
Volopay cards are the best way to manage your business cash flow
How to improve cash flow with corporate credit cards?
1. Select the right card for your business
Before you even begin to manage cash flow with corporate cards, it’s important to know what is it that your business needs. Once you have a clear idea of that, you’ll then be able to pick the right card for your business.
While you have the option to use a director’s personal credit card for business expenses, it’s not recommended when compared to corporate credit cards. With corporate credit cards, you can get a higher credit limit as well as better expense tracking for smoother cash flow management.
Also, discover the world of prepaid credit cards in our latest article. If you're interested in exploring the benefits and considering a prepaid card to streamline expenses and manage cash flow, delve into our content to learn more and explore the offerings from Volopay.
2. Automate payments
There’s no denying that there is a lot of administrative work involved when managing your cash flow. Whether that’s creating payments, recording transactions, or generating financial reports, there is a lot to do if you want to have good cash flow management.
Luckily, you can cut down some of that work with corporate credit cards. Use your cards to automate your vendor and subscription payments.
Instead of having to manually make your payments, you can schedule pre-authorized recurring payments to save time and ensure that you’re making all your payments on time.
You can streamline this process by utilizing automated accounts payable software solutions.
3. Bring all your expenses together
It’s difficult to track your expenses when they’re all happening in different places. This is especially true when you have vendor payments, online purchases, travel and entertainment spends, and other expenses.
While it’s impossible to axe a spend category, you can centralize your cash flow management by having an overview of all your expenses in one place.
When you manage cash flow with corporate cards, you can make most, if not all, of your expenses with your cards. With a linked card dashboard, these expenses will be easily trackable in a centralized location.
Refer our article on how to manage employee expenses with corporate cards to get the best tips and practices to streamline your expense management process.
4. Track and limit employee spending
It’s a great strategy to manage cash flow with corporate cards because you can easily track and limit your employees’ expenses.
Card sharing may work early on in your business, but as your business grows, tracking which employee made what expenses will be much harder if you only have one card being passed around.
Instead, equip your employees with individual corporate cards that have card-specific limits. If employees need to spend above the monthly limit, they’ll have to go through an approval policy.
Every employee expense will also be automatically recorded to allow you to track your cash flow better.
5. Use interest-free period
Different corporate credit card providers will have different credit plans. You want to find a provider that can issue cards with interest-free credit. This way, you’ll be able to give yourself some leeway while waiting on customer payments without worrying about spending more on interest.
Keep in mind that typically, you’ll have to pay off your credit bill in full after each billing cycle to get interest-free credit. When planned accordingly, you’re bound to improve your cash flow management with corporate cards.
6. Get time for your repayments
Sometimes you know that some cash is on the way, but you’re still waiting for your customers to process those payments. But your vendor payment deadlines are coming up and you can’t miss them.
It puts you in a difficult situation if you don’t have cash on hand yet.
Instead of chasing after your customers and nagging them, corporate credit cards are a great solution. They allow you to not stress over your expenses while still waiting for pending customer payments.
With agreed-upon billing cycles, you’ll also have some time before needing to make your credit repayment.
7. Earn rewards and points
Considering that it’s impossible to not make any expenses to run a business, you want to maximize what you get in return. Cash flow management with corporate cards allows you to actually save money in the form of rewards and points.
Look for a corporate credit card provider that offers a rewards system. Whenever you make a payment using your card, you’ll be able to accumulate points that you can then exchange for rewards like cashback and discounts.
These rewards can then be used to save money on future transactions, which will in turn help with your cash flow.
8. Gain insights with accounting tools
One perk of automating your cash flow management with corporate cards is that bookkeeping becomes easier. Instead of wasting your time manually entering accounting data, you’ll have the administrative work done for you already with accounting integrations.
Use your time to analyze the data you have on hand already.
Freeing up your finance team’s time encourages more productivity and therefore allows you to get more insights into your financial health. Equip your team with the right accounting tools to help you make better business decisions.
Do you know, Corporate cards helps businesses to simplify and manage all sort of expenses? Check out our article on why every business should have corporate credit card and get your corporate cards now.
How Volopay can help businesses manage cash flow effectively
No matter how big your business is, it’s vital to spare some time and tools to manage your cash flow effectively. In the long run, it ensures that your business will stay afloat and help you expand.
Get better cash flow management with corporate cards. Volopay corporate cards allow you to take advantage of a business credit line, track your employee spending, and ensure that there are no unwanted expenses.
Free up your time from doing tedious administrative work and improve your cash flow by spending more time strategizing and forecasting.
Interest-free credit line
No need to stress over immediate payments—get an interest-free credit line with Volopay. With a flexible billing cycle, you can plan your repayments accordingly.
Fast approval
Apply for Volopay cards now and get approved within a week. Start to manage cash flow with corporate cards as soon as possible.
Suggested read: How to apply for a corporate credit card in Australia?
Creating unlimited virtual cards
Managing your expenses is easier when you have individual virtual cards for specific payments. Create unlimited virtual cards and make all your payments on time.
Set spending limits
Overspending isn’t an issue with Volopay cards. You can set spending limits on each individual card and make sure that all expenses are made within the budget.
Manage and track overall expenses
You don’t have to worry about your bank statements surprising you. Get better control of all your expenses and track how much you’ve spent with just a few clicks.
Get real-time updates
Manually updating your records at the end of the month is a thing of the past. With Volopay, you can get automatic real-time expense updates from anywhere.
Integrate with accounting tools
Free your accounting team’s time by integrating corporate credit cards with your accounting software. Enjoy automated accounting for better cash flow management.
FAQ's
Yes. Not only will you have access to a credit line that could help you with your payment cycles, but you’ll also be able to track all your expenses. When you have a better overview of your cash outflow, your cash flow management will also automatically become easier.
Any purchases that could be made with your personal credit cards can also be made with corporate credit cards. This means that all merchants that accept card payments will be able to take your corporate cards as a payment method, whether that is in-store or online.
There are many components that go into cash flow management. Because of this reason, managing your cash flow effectively can be difficult. This is especially true if you don’t have good reporting, forecasting, and budgeting systems in place. It could lead to unnecessary expenses that negatively impact your cash flow. However, it is not impossible to improve your cash flow. Manage cash flow with corporate cards and track your spending to get a better outcome.
The goal is to maintain that you have a positive cash flow at all times, meaning that you’re never really out of cash. This guarantees that you’ll be able to cover all your expenses, including any unplanned ones that crop up. That being said, ideally you also don’t want too much cash sitting around and would want to invest a suitable amount into the business instead.
Yes. Knowing how to manage cash flow is crucial to any business. Businesses that are good at it will have a much easier time not only ensuring that they stay in business but also growing the business.