April 23, 2024

Of America’s 28,8 million small businesses, 20 percent will fail in the first year. Fifty percent will die in their fifth year, and 70 percent within their second year. Cash management issues are a significant factor in the failure of small businesses. Twenty-nine percent of them run out of cash.

Why do small businesses have such a difficult time managing their cash? Cash flow is the rhythm of money moving into and out of an enterprise. You want to have more money coming in than leaving. Many businesses must learn how their cash flow is going at any particular time. This is where the trouble starts.

Imagine a grocery store where customers pay in cash. The cashier may give the wrong change, or the money could disappear from the till. Imagine a restaurant. Taxes on daily sales are a penny per dollar. It doesn’t sound too bad. What if no one is saving those pennies? The restaurant owner needs help to come up with the cash – perhaps thousands of dollars – for the tax payment at the end of the month.

These tips and tools will help you better manage your cash flow.

Know the flow

In our interview with the restaurateur turned expert on cash management, David Joseph explained how businesses struggle to manage cash: “Cash management skills are one of the most important skills that business owners lack.” Joseph explained that it was essential to understand cash flow in and out. Clover can help them get money in. But when managing the funds they receive, many business owners need more skills.

Clover offers two apps to help small businesses keep track of their cash: Cash Log and Cash Track. Cash Log is a Clover app that’s free and especially useful in retail, where money is frequently exchanged. This app tracks cash drawer activity and all customer cash transactions to highlight where the cash is being moved. Cash Track follows the movement of money from employees or registers. Cash Track records cash assigned to each employee and registers at the start of each shift. Reconcile the employee’s total with the manager’s total and the shift report at the end of the change. Cash Track can also send daily shift reports via email or your Clover dashboard. Cash Track can even help restaurants calculate tip amounts.

Keep track of the sales tax every day.

David Joseph, who worked in restaurants, was surprised to receive a $9,000 tax bill from his bookkeeper. He asked, “Why can’t we have someone else do our sales taxes the same way ADP handles our payroll?”. He answered his question by creating a tool that he claims will help restaurant owners to sleep better at night. DAVO sales tax.

Joseph said: “It is automated.” Clover calculates sales taxes. It sends the data. “All that is automatically done, and we are doing cash management…we set aside a small amount of money [for sales tax payment] daily.”

DAVO collects sales tax daily, holds the money in a secure account, pays on time, and completes. DAVO users no longer worry about unexpected sales tax bills and late penalties.

Cash theft or mismanagement of cash can be a severe problem for businesses.

Fraud is a common way for businesses to lose track of their cash. Ping me If I can be a great tool to help you. Ping Me If is a fraud prevention app that sends emails or texts when certain events occur in your business. These include a payment or refund, a tip, or a discount above a specified amount, deleted orders or transactions, or opening the cash register without making a purchase.

Eject handling errors

CoinOut and Donate At Checkout are two clever ways of reducing the amount of cash you handle.

CoinOut is an electronic change handling system. Customers can receive their change digitally, save it and then get cash to spend at your business. They can also take a photo of their receipt and earn some money. CoinOut is available in Clover App Market and has a 0% transaction fee.

Donate at Checkout allows you to collect donations from your customers at the end of a transaction for your charity. You can view reports about gifts from the online portal. It has preset amounts and a “Round Up” feature.

Funding for emergencies and seasonal changes

Cash flow could be improved by a failure to plan for the unforeseeable. Fortunately, DAVO creator David Joseph figured out two easy solutions: Savings Club.

How often have you heard restaurants say the air conditioner has broken? Joseph said. If you save $20 per day by the end of the calendar year, you will have around $7,000.

Savings Club is an annual saving tool that automatically puts money aside daily and returns it to you in mid-December. Sweep and Save sets aside a percentage from daily sales to cover monthly expenses and returns it on the 1st of the following month.

Joseph said, “If you pay $600 monthly rent and are open every day of the week, you can save $20 each to have $600 on your account at the beginning of the month.” You don’t need to worry about it. Budgeting is not required. You don’t have to budget for it.

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