Managing the finances of a small business is an ever-evolving learning curve. And if you’re like most entrepreneurs, you’re focused on growing to hit the ranks of scaling to larger presence—or financial freedom. Understanding the nuances that impact your cash flow is optimal to achieving this milestone.

Here are five things that shape your cash flow operations and just what you can do about it.

Financial Technology and Payment Solutions
Tracking cash flow is a crucial task, and there’s reasonably priced software available to help you do it. Optimizing your statements or invoicing processes with tools like QuickBooks or AccountEdge Pro can help you make smarter financial decisions around your business.
Debt Management

You’ll be hard pressed to find a business owner that didn’t accrue any form of debt throughout their journey to building a company. The key is tapping into these resources while you’re already in good shape. You’ll be more likely to be approved and increase your business credit to curve future pitfalls.

3. Changes in Working Capital

Working capital is the difference in your company's current assets and current liabilities. According to reports on Investopedia, the most significant use of operating cash flow can be traced back to increasing dollars in working capital. The more working capital you have in cycle, the more you can invest in expanding and growing your company. Spending decisions such as industry events, system upgrades should be reflected in your cash statements.

4. Average Collection Period in Accounts Receivable

Being cognizant of your average collection period between invoicing and payouts received can help determine the effect it has on cash flow. Average collection period measures the length of time it takes to convert your average sales into cash. This measurement defines the relationship between accounts receivable and your cash flow. A longer average collection period requires a higher investment in accounts receivable. A higher investment in accounts receivable means less cash is available to cover cash outflows, such as paying bills.

5. Separate Business Accounts

A separate checking account is a useful way to keep all your business transactions in one place. If you’re going to charge business expenses, a separate business credit card is also helpful.

5 Things Impacting Your Cash Flow