How to Manage Cash Flow for Small Business - Virtual Cards

Managing a small to medium business comes with its own set of challenges, especially for first-time entrepreneurs. Without a prior experience, it can be difficult to determine what is necessary to keep the business running smoothly and ensure the long-term financial health. Before launching an SME, there are several essential factors to consider to avoid failure before making a genuine attempt.

As a starting point, ensure your finances are in order. Financial issues are one of the primary reasons why SMEs fail in their early stages. Starting your SME without a solid plan for funding, cash flow management, and expenditure can be risky and add stress to an already high-stakes situation. Cash flow is a key factor in those considerations and having financial tools like virtual cards can greatly help you in making right decisions.

Once a plan has been made that outlines how an SME will receive its start-up funding, a CFO should be hired to manage the cash flow throughout your business's life span. In the initial stages of getting your SME up and running, you may find yourself spending more money than originally planned. Between the cost of operations, products, services, marketing, advertising, digital needs, and paying employees, you may find the running total to be a bit alarming, resulting in overspending.

Overspending is a common cashflow pitfall that can be avoided with some strategic planning and overall visibility of business spending. Though not all expenses can be predicted, having a general idea of the expenses that will be acquired during the different stages of operation and a way to easily visualize and control company spending is a great way to manage cash flow.

Underspending is another common cashflow pitfall SMEs face as many try to recover from their first year of overspending or unexpected financial hard falls throughout their lifespan. However, underspending is not the best solution despite the desire to generate a bigger profit margin to keep the cash inflow positive. Underspending typically means cutting corners where corners shouldn't be cut, which results in lower-quality products and strained employees. Spending less money on products should only be done if your SME can upkeep the quality of goods it produces, which is typically not the case.

Having a strong financial team or a CFO guide you through your spending is a great way to avoid overspending/underspending altogether. CFOs and their team are experts in their field who can work closely with you to build a financial plan and implement current technology, such as virtual cards, to better manage your SME's cash flow.

Virtual cards are best described as a card that has all the properties of a real card, except that it's not physical. In order words, they have a unique 16-digit number, CVC, and expiry date associated with the card. Virtual Cards can be used to safely make purchases online and through your phone. Virtual cards can improve cash flow, reduce fraud risks and provide transaction visibility by combining the benefits of physical cards and the functionality of checks.

Not sure how virtual cards should be used to manage cash flow? Here are just a few ways to use virtual cards to better manage your SMEs cash flow:

There's no doubt that running a business takes time management and organization skills to be able to tackle all the hard work that one must keep up with. At some point, you may find yourself surrounded by tasks and responsibilities that have piled up, which can lead to missed deadlines and unwanted fees. Despite conscious attempts to avoid this, missing payment deadlines happens to even the most organized CFO or business owners. On top of having to manage payment deadlines, being able to control spending and track expenses are other necessary tasks which should be done to better manage your SMEs cash flow. Between personal employee expenses, department expenses, and expenses from paying suppliers and other important members of your business, keeping track and controlling these cash outflows can become a daunting task

Using virtual cards is a great way to avoid paying additional fees from missed payment deadlines, control company spending so that you remain within budget, and track employee spending so that you are fully aware of where expenses are coming from. Virtual cards make it easy to manage all your online subscriptions, making them visible so that each one is paid on time and no additional fees are acquired. Limits can be set with each virtual card that is issued, allowing you to have total control over company spending and better cash flow management.

Virtual cards can also be used to track employee expenses by issuing unlimited single or multi-use spending cards for each employee. As the name suggests, single-use virtual cards can be used once while multi-use virtual cards can be used multiple times on a particular project. Since these cards are used for specific tasks, the expenses can easily be tracked by project or employee, ensuring that every penny is accounted for and expenses remain managed.

As previously mentioned, virtual cards are equipped with a variety of features that can be used to build better supplier relationships over time and with optimal use. By using virtual cards to remain on top of subscription and supplier payments, your business reputation is likely to become positive as quick and on-time payments make any supplier happy to be in business with you. As the supplier relationship builds over time, your business is likely to receive discounts and other perks that benefit your business's cash flow. The more your business uses virtual cards to better manage payments and cash flow, the better the relationship will be with your suppliers.

It’s hard to come by something that is actually free nowadays. Hidden fees and additional charges that may be tucked away within a lengthy contract often pop up unexpectedly and at the worst times. By the time you become aware of these additional costs, it is already too late to back out of the contract and you may be stuck paying undesirable fees every time you make a transaction. Though you may already be used to these nasty surprises, your SME can rest assured in knowing that virtual cards do not come with any additional fees.

With Fyorin, applying for virtual cards is easy. There are no hidden fees or additional charges that will creep up on you at any time while using this convenient service for your SME. In addition, you can link your virtual cards directly to a multi-currency account or a sub-account. Your SME can pay and receive foreign currency by continuing to pay the small and transparent fee for the best exchange rate on the market without additional fees for using the virtual card. Not having to worry about additional fees allows your SME to allocate those funds elsewhere, helping you better manage your SMEs cash flow.

Beyond the cashback that Fyorin's virtual cards provide to help your business lower the transactional costs, they also promote greater visibility with employee expenses and allow your business to better manage cash flow by allowing you to control spending and manage subscriptions. Limits can be set on each virtual card that is created and subscriptions are all displayed on your company's dashboard. Fyorins virtual cards are not only easy to create but they can be used to better manage your SMEs cash flow in a variety of ways!