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How to Improve Cash Flow Management by Using Transfers

If you want to effectively grow your business and keep it going during lean times, then you’ll need to master cash flow management. What is cash flow? Here’s a quick review. Cash flow is defined as the total amount of money that’s going in and out of your business, and it affects your overall liquidity.

Why is cash flow important? Well, put simply, without cash coming in from customers and vendors, you can’t spend money on things like inventory, payroll processing, or everyday expenses. Without paying for new inventory, employees, or expenses, your business will cease to exist. Cash flow management can be a catch-22. In fact, a recent survey showed that nearly 43 percent of small business owners have frequently been at risk of not being able to pay employees by payday. Moreover, another study on cash flow statistics found that 34 percent of small and medium enterprises (SMEs) experiencing late payments say they have to rely on overdrafts to help them meet their obligations.

But don’t worry. We have tools to assist you with cash flow management. We can help you understand how to set up payroll, how to manage cash flow effectively, and how to improve your cash flow so you can spend more time growing your business instead of saving it. Square also gives you the tools to create a cash flow analysis, giving you the ability to determine when you spend the most and when you need to schedule invoices to help with your overall cash flow management.

But, one of the most essentials tools is transfers, since transfers determine when you have that cash in the bank.

Square’s transfer options

Square has several different types of transfer options to help manage cash flow effectively: next-business-day, online bank instant transfers, same-day, and add money. We’ll detail the differences among all the transfer options below.

Next-business-day transfer

Square’s default next-business-day option transfers money into your bank account in one to two business days. Square groups and sends payments based on the time you choose to end your day. By default, your close of the day is 4 p.m. GMT, but you can customise your close of day if your business stays open later.

As shown below, if your business closes at 4 p.m., transactions completed before close are transferred on the next business day. Transactions completed after 4 p.m. are transferred on the second business day. Next-business-day transfers are free of charge, which is something to keep in mind when understanding your businesses cash flow management.

Instant transfer

Square Transfers is the perfect solution for you if you want the money available in your account even faster than the next business day, you can use Square’s instant transfers to immediately help your cash flow management. Whether it’s late at night or over the weekend, an instant bank transfer lets you transfer your sales into your bank account with just a tap.

For each instant transfer, the fee is just 1 percent of the amount transferred. Learn more about setting up instant transfers.

Transfers in real life

Fortunately, Square gives you multiple ways to accept payments. Here’s how transfers may play out in your day-to-day cash flow management.

You may utilise online bank instant transfers to pay for a one-time inventory delivery. For example, a photographer may shoot an event on Friday and use instant transfers to print photos for weekend delivery.

If you have weekly bills that you pay regularly, as a restaurant may pay for food deliveries and supplies, scheduled transfer is a great way to manage cash flow by ensuring you have funds in your linked bank account readily available.

A pub owner with fairly set operating costs may utilise next-business-day transfers to keep a regular influx of cash transferred into their account during the business week.

Whatever your business’s cash flow management needs, Square offers transfer support that can help you run, grow, and succeed.