Businesses today face various financial challenges, from fluctuating supply costs to broader economic concerns. If you are concerned about your business's financial future, you're not alone.

No matter what your goals, having a firm grasp of your business' short- and long-term financial goals can help you weather uncertainty and set your business up for success. In practice, this means having strong cash flow to support your business in the short term, and following accounting best practices to fuel long-term growth. 

Here, we'll share tips and strategies for businesses to manage both cash flow and accounting - plus, where to find the support you need to achieve your business goals.

Cash flow and accounting are both critical for a financially healthy business, and they work synergistically to help fuel growth. However, there are significant differences between the two. 

In a nutshell, cash flow is a measure of the cash moving into and out of your business for a given period, such as a month, quarter, or year. It's calculated using the following equation:

Inflows include revenue from sales, as well as income generated from other assets, like real estate or investment holdings. Outflows include money spent on labor, supplies, servicing debt, and any other costs associated with running the business. 

Having a positive cash flow (when your inflows are greater than your outflows) can signal your business is performing well, and indicates that you have the cash on hand to cover your immediate expenses. On the other hand, negative cash flow may serve as an early warning sign of weakening financial strength, allowing you to adapt your strategy accordingly. 

While cash flow is just one piece of the puzzle when it comes to your business's financial health, accounting allows you to gain more holistic insights into financial strength.

Accounting focuses on the following aspects of a business:

Accounting also plays a role in your business's tax strategy, with strong accounting practices helping you run a tax-efficient business.

Businesses that excel at accounting create a solid financial foundation to support growth. For example, maintaining a healthy level of liquidity means businesses have cash on hand to cover unexpected expenses or downturns in the economy, while businesses on the brink of running out of cash may need to close during a slowdown. Running a tax-efficient business also helps the company retain more of its profits over the long term, so leaders are more likely to have the resources to meet their business objectives.

Cash flow and accounting work synergistically to help strengthen your business. Without strong cash flow, you risk running out of money before you can execute longer-term strategies; Without strong and prudent accounting practices, you're less likely to run a cost-efficient organization, which can weaken cash flow over time.

However, businesses have several opportunities to improve both their cash flow and accounting practices. The following strategies can help set you up for success.

Cash flow management and accounting are both critical for business management, and you should be checking in on your finances regularly. Since cash flow offers insights into your short-term financial health, you'll generally want to look at it regularly, such as monthly, weekly, or even daily. 

You'll also want to practice accounting regularly, but the frequency of your check-ins may depend on your goals. You might check in on profits or losses weekly or monthly, for example, but only revise your tax strategy annually or when there has been a significant change in your business. 

Pro tip: Consider investing in a Point of Sale (POS) solution that includes accounting tools or integrates with your existing accounting software. The optimal solution should make it easy to generate financial reports to support your decision-making.

Accounting and cash flow management can involve tedious manual processes - like data entry, invoice processing, and expense approval. That's not just costly, since your workforce may spend hours completing these tasks, but it also makes it near-impossible to get financial insights in real time.

Consider investing in technology to streamline easily automated processes, like data entry. You'll not only boost efficiency, but you're more likely to have access to the real-time data you need to make informed decisions.

Nearly every business experiences financial hardship at one point or another. But, by seeking out support early, you're more likely to have the time and resources you need to react. 

That support can come in the form of a business banking expert, who can sit down with you to talk through your business's financial strengths and challenges. A banking expert can help you improve your cash flow to boost your financial strength in the short term, for example, or help you find the best credit or lending option to reach your long-term goals.

Whether you're looking for industry trends or want a financial check-up of your business, we're here to help you map out your next steps. Take our interactive quiz to assess your business' financial health and get insights on how you can strengthen your business. Click here to take the quiz.