Cash flow is the pulse of any business, be it large or small. It is the money flowing in and out of your business and is important for operational continuity and long-term success. Cash flow management should be at the top of every business owner’s priority list, due to its significant influence on your financial stability. In fact, poor cash flow is one of the major reasons why many businesses don’t thrive.
A useful tool that can help you manage the cash flow of your business is a current account. Know how in detail below.
Tips to use your current account for better cash flow
From considering current account opening with the right bank to utilising digital tools, learn useful tips on how to efficiently manage your business’s cash flow.
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Open a current account with the right bank
Choose an online current account that aligns with your business needs and offers benefits like low fees, higher transaction limits, overdraft facilities, or interest on idle funds.
You can choose the Indus Premier Current Account by IndusInd Bank to get all these exclusive benefits at your fingertips. Here are additional features of this digital current account that support your business cash flow management:
- Higher transaction limits
- Auto-sweep deposits
- Grouping of accounts facility
- Dynamic cash deposit limits
- Premium digital banking services
- Doorstep banking service, and more
Open a current account with IndusInd Bank with a 100% paperless process today!
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Leverage overdraft facilities
An overdraft facility is one of the most crucial benefits of current accounts you get. It helps businesses withdraw funds even if the balance is zero, which means you have a 24/7 safety net during cash flow shortfalls.
Note that you have to repay the borrowed sum with interest. So, use it wisely to cover the cash gaps, as the interest can accumulate quickly. Think of it as a short-term funding backup, not a long-term strategy.
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Use online banking and payment services
For routine expenses like rent, bills, and supplier invoices, it is wise to set up standing instructions with your current account. This prearranged schedule means your ongoing expenses will be done on time automatically.
Moreover, you can encourage clients to pay online to speed up the receipt of funds into your bank account. This will help you reduce the time it takes for their payments to clear and improve the liquidity of your current account.
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Take advantage of auto-sweep facilities
The current account interest rate is not a feature offered by most Indian banks. This is because these are heavily operated accounts and operational costs are too high for banks. The Indus Premier Current Account by IndusInd Bank offers a solution to this problem and gives you an opportunity to earn high interest, with its auto-sweep feature.
The auto-sweep facility moves any surplus balance in your current account to a Fixed Deposit (FD) where they earn FD-like rates. If you need any amount back, the required amount can be swept back without any penalty. This way, you have the liquidity to manage everyday transactions, and your idle money works harder for your business.
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Maintain a cash reserve
Keeping a minimum current account balance is a good habit, but rainy days happen while running a business. Hence, it is advisable to maintain a buffer or cash reserve in your current account to cover unexpected expenses or downturns in income/payments. This reserve can help you avoid resorting to high-interest loan options to manage a cash crunch and enjoy peace of mind.
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Forecast future cash flow and set targets
Analyse the transaction history in your current account to forecast future cash flow requirements. This analysis can reveal your peak income periods and routine expenses, which you can use to set income and expenses targets. Try to align your spending and investment decisions with these forecasts to avoid cash shortfalls.
Regularly compare actual outcomes with your forecasts to reassess your predictions and adjust your cash flow strategies as necessary.
The bottom line
A current account, when used effectively, can help you manage your business’s cash flow to a great extent. It involves choosing the right account, automating payments, managing receivables/payables strategically, and leveraging facilities like overdrafts and online banking.
Also, cash flow management requires constant effort, which is why it makes sense to monitor your current account regularly and modify strategies as needed. This disciplined approach can help you manage cash shortfalls better, minimise risks, leverage new opportunities, and even maintain the long-term growth of your business.
