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3 easy ways to tighten cash flow gaps

3 easy ways to tighten cash flow gaps

Posted on: September 10, 2012
Author: ATB Business & Agriculture

The reason cash flow is messy and hard to measure is because of time. Thankfully, there are a few ways you can tighten up the timing of payments and collections to improve your cash flow.

What are the real-world benefits of EFTs?

"Not having to process cheques, get them signed, disperse them to employees in the field (sometimes out of town) and then have them take an hour or more off to go to bank every payroll. Operationally it's a huge time saver!"

—Candace, Earthwise Contracting Ltd

Here are three easy ways to make your administration life easier.

  1. Automate payroll

    Although you pay your employees on the same day every month, they may not cash their cheques all on the same day (some may even lose or misplace their cheques). This makes it hard to reconcile exactly how much cash you have. By automating your payroll through Electronic Funds transfer (EFT) you can ensure your payroll goes directly into the accounts of your employees and no more tracking cheques down or dragging out the reconciliation process.
  2. Automate payment collection

    If you're collecting cheques, there can be a 1-2 day delay in your bank processing the cheques you deposit, and increased risks of NSF cheques/chargebacks. Using an EFT service eliminates the waiting period for cheques to clear, and that cash flow is immediately available to you.
  3. Encourage early payment

    Offer customers incentives to pay early or use guaranteed payment methods such as bank drafts or EFTs. You can also take advantage of these types of solutions for payments you are making.

Other articles you may be interested in:

What's a cash flow, and why should I care?
Designing a cash-flow forecast