4 min read

10 Tips for Managing Your Clients’ Cash Flow Like a Pro


The goal of any business is to secure a profit from revenue, but the real blood flow of business is cash. It is a powerful indicator of your business’s health, as it is the only way to handle the daily requirements: salaries, supplies, rent, etc. 

One way that accounting firms can stay at the top of their game is by reviewing some of their most basic services. This article explores ten ways that you can revolutionize your cash flow management services and instill trust in your clients. These tips should help you evolve from a simple number-crunching service to a more advisory approach, allowing you to glean better insights into your clients’ numbers and goals. 


1. Budgeting Assistance

Let’s start with the basics. Understanding your client’s goals and the challenges they may face, mixed with some fancy accounting footwork, can help your client prepare an increasingly stronger budget. Linking this budget to the client’s expected revenue and adjusting as things move along is an excellent way to keep the client realistic.


2. Expense Analysis

Just as important as preparing expenses is reviewing them to understand where the money is going. Unexpected events are bound to happen, but others may become part of the business model. By regularly analyzing a term’s expenses, you and your client can determine whether the cash is working for the business’s benefit or hindering its progress.


3. Tax Planning

There’s nothing to be done about taxes, folks… nothing to be done.

As you help your client prepare a budget, the firm can also focus on the expected earnings before interest and tax to calculate yearly taxes. You can also provide guidance on how to take advantage of tax breaks available to your client. The goal is to ensure that paying taxes in a timely manner doesn’t impact the available cash for your client.


4. Inventory

A strong budget and expense review can also show you inventory purchase behaviors. This point requires work from both you and the client because only they know how they handle their own warehouses, closets, or that weird cardboard box in the back where they keep their stuff. You can offer guidance on where the client can explore better bulk deals or where to cut expenses based on demand. If the client is open to it, you can suggest practices like first-in, first-out behaviors and best-by-date control.


5. Leasing or Owning

Leasing and owning can provide tax benefits and reductions, and they each have advantages and disadvantages

Leasing is cheaper initially, though it can be a larger expense in the long run. It allows your clients to use what they need without spending the full price outright, making better use of immediate cash. It also allows a business to update its equipment when the lease term is over. However, as with any binding agreement, the lease payment must be completed.

Purchasing represents a single, large expense — or a few payments during a term that leads to ownership. This option is great for equipment and assets that don’t need to be updated constantly. In addition to tax deductions, a purchase is also subject to depreciation deduction. However, it also means your client eventually gets stuck with old equipment.


6. Contingency Planning 

One crucial aspect of cash and budgeting is preparing for unexpected expenses. In addition to preparing your client to be able to survive for a few months without revenue, the work you’ve done so far — budgeting, expense analysis, etc. — will allow your client’s budget to have some extra cash to be ready for emergencies. Remind your client that, though this cash will ideally never be used, it should also stay untouched as much as necessary. You can also suggest reimbursement practices whenever the contingency fund is used for something else.


7. Financial Reviews

Regular checkups of your client’s financial situation can help you offer more accurate insights. This practice has many benefits, both in the short and long term. For one, they can empower you to stay ahead of coming changes and prepare you to make better decisions in the short term, as you are more aware of your capabilities. It can also help you understand your performance, which is key to longer-term strategic planning. 


8. Debt Management and Payment Plans 

Strategic debt can be very beneficial to a business. It helps build strong credit, which will allow them to get better funding in the future. Carefully examine the way your client handles debt and the payment plans they’ve established. Further, calculate their debt-to-income ratio and strive for 36% or less of their income to be used to handle debt — it should never exceed 50%. If this is not the case, explore other payment plans that can get them closer to healthier debt so their cash flow isn’t entirely drained by it. Bear in mind that some additional debt may be reasonable for certain cases, but be prepared to recognize when they may overextend.


9. Accounts Receivable Management 

There’s always some strength in working with credit, but you have to keep a close eye on accounts receivable to ensure that this credit doesn’t turn into debt for you. Comprehensive control over outstanding invoices and a standardized communication procedure with clients can optimize billing and collections to secure timely payment. AI tools can provide automated account receivable management.


10. Forecasting

Using thorough data is a fantastic way to manage cash flow. Beyond expense and income reviews, it can support more informed decisions and strategies, as it allows you to predict changes in cash availability and upcoming expenses and investments. By supporting your data with intelligent tools, you can produce more reliable results.


The Right Tools


Now, this is easier said than done when you have many clients. Comprehensive advisory services involve an organized analysis of many changing factors from various sources. Sophisticated AI tools like Botkeeper Infinite can help you keep track of any number of clients in a smart, automated interface that easily categorizes transactions, empowering you to offer more reliable and constant support. Click here to learn more about how our approach to accounting AI can help your firm reach its full potential in cash flow management and other key services.