Imagine your business is booming. Customers are lining up, invoices are rolling in and revenue looks great on paper. But when it comes time to pay vendors, cover payroll or invest in growth, you’re scrambling to find the cash. Sound familiar? Welcome to the world of cash flow.

Cash flow isn’t just about how much money your business makes—it’s about when that money arrives and whether it’s there when you need it. A profitable business can still find itself in financial trouble if cash flow isn’t managed properly.

So, what is cash flow in a business?

In this guide, we’ll break down why business cash flow matters, common pitfalls that trip companies up and actionable strategies to keep your finances in the green. Whether you’re an entrepreneur looking to scale or a seasoned business owner fine-tuning your financial strategy, this is your go-to guide for discovering:

• What is cash flow in a business?
• Why is cash flow important?
• Common challenges in managing cash flow
• How to calculate cash flow
• Importance of company cash flow management and analysis
• How to improve cash flow in a business 

What is cash flow in a business?

Cash flow is the pulse of your business’s financial health. It’s the money flowing in from customers, sales or funding, and the money flowing out to pay employees, cover expenses and invest in growth. And we know from recent spend trend data that highly profitable companies dedicate a large portion of their spending to growth measures like digital marketing. 

A well-managed cash flow ensures that your business has the liquidity to meet financial obligations, capitalize on new opportunities and maintain stability—even in times of uncertainty. Understanding and optimizing cash flow is essential for long-term success. Even profitable businesses can struggle if they don’t have cash available when they need it.

Incoming vs. outgoing cash flow

Business cash flow can be broken down into incoming cash flow (money flowing into the business) and outgoing cash flow (money leaving the business).

Incoming cash flow includes things like customer payments, loan proceeds, investor funding and revenue from selling assets.

Outgoing cash flow covers rent, payroll, supplier payments, taxes, debt repayments, operational costs and other expenses.

Positive vs. negative cash flow

Positive cash flow means more money is coming in than going out. This allows for reinvestment, savings and financial flexibility. 

Negative cash flow happens when expenses exceed income, leaving a business struggling to meet obligations. While occasional negative cash flow may not be a red flag, consistent shortfalls signal potential trouble. Think of it like a leaky bucket: sooner or later, you’ll run dry unless you patch the problem.

Types of cash flow

Cash flow breaks down into three main categories:

1. Operating cash flow – This is your day-to-day cash movement. It includes revenue from sales, payments from customers and expenses like payroll, rent and utilities.
2. Investing cash flow – Money going in and out related to investments. This could be purchasing equipment, acquiring another business or selling assets.
3. Financing cash flow – Funds moving between your business and investors or lenders, such as business loans, issuing shares, or paying dividends.

Understanding these cash flow types and categories can help you spot potential financial trouble before it happens. 

Why is cash flow important?

A steady, positive cash flow gives you the ability to cover expenses, invest in new opportunities and weather unexpected financial storms.

Here’s why visibility into cash flow should be a top priority for every business owner:

• It keeps operations running smoothly. If you don’t have enough cash on hand, even a minor delay in customer payments can lead to missed payroll, unpaid suppliers or service disruptions.
• It prevents reliance on expensive debt. When cash is tight, businesses often turn to high-interest credit lines or loans to cover expenses. Avoiding unnecessary debt keeps your business financially healthy.
• It fuels business growth. Whether you want to expand into new markets, hire additional staff or upgrade equipment, having available cash allows you to jump on opportunities without hesitation.
• It builds financial resilience. Unexpected costs, like equipment breakdowns or economic downturns, can cripple a business that isn’t financially prepared. A well-managed cash flow acts as a safety net.

“There’s a timing aspect to cash flow,” Jennifer McNamee, CPA and Senior Finance and Account Manager at Float, explains. “If you have a mismatch on the inflows and outflows, you could run out of cash. Then you have to tap into emergency solutions like debt or a line of credit, which are costly ways to finance your business.”

Common challenges in managing cash flow

Even businesses with strong revenue can run into cash flow problems. According to a Float study, 65% of SMBs are dealing with long processing times for financial transactions, and 59% are experiencing lengthy loan approval processes—both issues that can lead to significant cash flow issues.

Here are some of the most common challenges that can impact financial stability:

1. Delayed customer payments – When businesses rely on invoices with long payment terms (e.g., net 30, net 60), it can create cash flow gaps. If customers take too long to pay, it affects the company’s ability to cover its own expenses.
2. Large upfront costs – Some businesses, especially those in retail or manufacturing, must pay for inventory, raw materials or equipment long before they generate revenue from sales.
3. Unexpected expenses – Emergencies happen. Whether it’s equipment repairs, tax obligations or market downturns, unexpected costs can drain cash reserves quickly.
4. Poor payment terms with vendors – If your vendors require quick payments while your customers take longer to pay, you may find yourself constantly short on cash.
5. Seasonality – Maybe your business has peaks and valleys in operations, much like an ice cream shop would during the winter. Accurately forecasting seasonal dips in sales can help you prepare for the lull. 
6. Lack of cash flow visibility – If a business doesn’t regularly monitor cash inflows and outflows, it can be blindsided by a sudden shortage. Understanding cash flow trends through frequent reporting is key to preventing financial surprises.

How to calculate cash flow

Calculating cash flow is essential for understanding your business’s financial health. Accurate visibility into cash flow requires diligent expense management, revenue tracking and proactive forecasting. The primary tool used to calculate it is the cash flow statement, which provides a snapshot of how cash moves in and out of your business over a specific period.

You don’t need to be a CPA to make sense of this (although a cup of strong coffee might help). To oversimplify it, you can calculate cash flow with this basic formula:

Cash Flow = [ Cash Inflows – Cash Outflows ]

Reading your cash flow statement will be slightly more complex. Cash flow statements track how money moves in and out of your business and are divided into three main sections, which you can see in the example below.

Operating activities cover cash generated from day-to-day business operations. It starts with net income, then adjusts for non-cash expenses like depreciation and amortization. It also accounts for changes in working capital, such as money tied up in accounts receivable, inventory and accounts payable. If your company sells products or services on credit, cash flow may be delayed, while paying suppliers later can temporarily improve cash flow.

Investing activities focus on buying and selling long-term assets. This includes capital expenditures (CapEx), like purchasing equipment or property, which reduce cash. On the other hand, selling assets or investments brings in cash. This section also includes buying or selling marketable securities or acquiring other businesses.

Financing activities track cash movements related to investors and lenders. Raising funds through loans or issuing stock brings in cash, while repaying debt, paying dividends, or buying back shares reduces it. This section reflects how your company funds its operations beyond its core business activities.

At the bottom of the cash flow statement, all these cash movements are added up to show the net increase or decrease in cash for the period. This is reconciled with the beginning cash balance, leading to the final ending cash balance—the actual cash the business has on hand at the end of the reporting period.

Importance of company cash flow management and analysis

Analyzing cash flow will help you make smarter business decisions. Here’s how: 

• Identifying financial trends: By consistently analyzing cash flow, you can recognize patterns in revenue and expenses, such as seasonal dips, delayed customer payments, or unexpected cash shortages. This allows your business to plan ahead, ensuring you have enough cash reserves during slow periods and optimizing spending during peak times.
• Ensuring liquidity: Maintaining a steady balance between cash inflows and outflows ensures that your business can cover essential expenses like payroll, rent and supplier payments without disruption. A clear picture of your cash position helps prevent cash shortages that could jeopardize operations.
• Avoiding unnecessary debt: Poor cash flow management often leads businesses to rely on short-term loans, high-interest credit lines or emergency funding to stay afloat. By proactively monitoring cash flow, you can better anticipate financial needs, reduce reliance on costly borrowing and allocate funds more efficiently to support sustainable growth.

But cash flow management isn’t all about saving for a rainy day. Once you’ve mastered it, you can use cash flow to help your business grow by reinvesting strategically. “Sometimes, businesses get too focused on cash preservation and miss out on opportunities for growth,” says Jennifer. “Finding the right balance between saving and strategic reinvestment is key.”

With a balanced approach, reinvestment can help you expand operations by opening new locations, hiring employees, or increasing production capacity. It can support technological upgrades, investing in tools or automation that improve efficiency and productivity. 

Allocating funds to marketing efforts can drive customer acquisition and increase revenue, while reinvesting in product development fuels innovation by supporting research and development. Overall, sound cash flow management sets you up for sustainable success in your business. 

How to improve cash flow in a business

Here are 7 ways to take back control and improve your business’ cash flow.

1. Speed up receivables

One of the easiest ways to improve cash flow is to get paid faster. Send invoices as soon as work is completed and set clear payment terms. Consider offering early payment discounts to encourage quicker transactions, and automate reminders to follow up on outstanding invoices. The faster money comes in, the less likely you are to run into cash shortages.

2. Negotiate better payment terms

Negotiating extended payment deadlines with vendors gives your business more flexibility. If possible, arrange staggered or milestone-based payments for large projects to spread costs over time. Many vendors are open to flexible arrangements, especially if you maintain a strong relationship.

3. Cut unnecessary expenses

Conduct regular audits of your expenses to identify areas where you can cut back costs. Cancel unused subscriptions (hey, we’re all guilty of it!), renegotiate contracts and consider shifting to more cost-effective operational models. Even small savings can add up to significant cash flow improvements over time.

4. Maintain a cash reserve

Having a financial cushion is crucial for handling unexpected expenses. Set aside a portion of your profits into an emergency fund that can cover at least three to six months of operating costs. Consider placing these reserves in a high-yield account to maximize returns on idle cash while keeping it accessible when needed. This ensures that you have funds available to navigate downturns without relying on expensive debt options. 

5. Optimize inventory management

For product-based businesses, inventory can be a major cash drain. Avoid overstocking by closely monitoring sales trends and using just-in-time inventory systems to reduce holding costs. Clearing out slow-moving stock through discounts or promotions can also free up cash that’s otherwise tied up in unsold products.

6. Leverage cash flow management tools

Technology can help you track and improve business cash flow. Software like Float provides real-time insights into cash movements, helping you forecast potential shortfalls and make informed decisions. Automating financial tracking also reduces human error and ensures you always have a clear picture of your financial standing.

7. Diversify revenue streams

Relying on a single income source can be risky. Consider expanding your offerings, entering new markets or adopting subscription-based models to create more predictable revenue. Upselling and cross-selling to existing customers can also improve business cash flow without increasing acquisition costs.

Get visibility into your cash flow with Float 

Cash flow management doesn’t have to be a guessing game. With Float, you gain real-time insights into your business’s financial health with a leading spending and expense management platform that helps you track outflow to make informed financial decisions. Whether you’re looking to streamline operations, cut costs, or plan for future growth, Float gives Canadian businesses tools needed to stay on top of cash flow with confidence. Try Float today and take control of your business finances.

Your cash flow statement can provide precious insights about the health of your business and give you the information you need to make strategic financial decisions. But for small business owners who don’t have an accounting background, reading financial statements can feel like decoding ancient Egyptian hieroglyphs. Creating them can be just as confusing. To get value out of your cash flow statements, you need to know when to use them and how to analyze them.  

In this guide we go beyond the basics of what is business cash flow. We’ll cover how to prepare a cash flow statement, illuminate the nuances of direct vs indirect cash flow statement methods and take a look at a cash flow statement example so you can read your own like a pro.

What is a cash flow statement?

A cash flow statement (CFS) summarizes the inflow and outflow of cash in your business over a specific period of time, usually a month. It tells you how much operating cash you have on hand to spend. This cash contributes to your business’ liquidity—your ability to pay bills and debts, also known as liabilities, with cash or the current assets you own. Along with the income statement and balance sheet, it’s one of the three core financial statements that businesses are required to generate.

Who prepares cash flow statements? 

We hate to break it to you, but every small business owner should know how to either prepare or read a cash flow statement. It can give you a serious edge when you’re making business decisions. If you have a bookkeeper, they can prepare your CFS and give you insights about how your cash flow is doing. In larger companies, the accounting team is usually responsible for creating cash flow statements as part of quarterly or annual financial reporting. 

Why creating a cash flow statement is important for your business

Managing cash flow is the cornerstone of strong operations. If you don’t have enough cash, you can’t cover your regular bills, or pay yourself or your employees. About 54% of new small- and medium-sized businesses (SMBs) in Canada experience cash flow issues and two-thirds of SMB owners agree it’s important to improve cash flow management efficiency. 

Creating and analyzing your cash flow statements on a regular basis gives you insight into how well you’re managing cash and whether you’re striking a healthy balance between your investments and your cash on hand. 

Understanding your cash flow statement can help you assess whether you’re generating enough cash to cover your regular operating expenses. If you’re struggling with cash flow, it may be time to seek out a loan or find ways to cut costs. 

Looking at your cash flow over time can help you determine whether your financial strategy will work for your business in the long run. It can also help you figure out whether you’re ready to invest in the next stage of growth and provide a starting point for your financial strategy for expansion efforts, like hiring more team members or buying materials for a new product line.

How to prepare a cash flow statement

There are two main approaches you can take to generating your CFS: the direct method and the indirect method. Understanding the direct vs indirect cash flow statement methods can help you determine which one is the right fit for you and your business—one of them is definitely the better option for growing businesses (and busy owners), but we’ll let you decide. 

Cash flow statement direct method

The cash flow statement direct method requires you to keep a record of every single time cash leaves or hits your bank accounts during the reporting period. When you’re ready to prepare the CFS, you subtract the total cash spent from the total cash earned. 

If you’re using the direct method, it’s important to accurately identify cash inflows and outflows. For example, outstanding invoices in your accounts payable (AP) or accounts receivable (AR) don’t count towards your cash flow because you haven’t actually sent or received that money yet. 

You also don’t need to list individual purchases made with your credit cards or revolving line of credit as part of your cash outflows. You only need to include the payments you make from your bank account when you pay down the balance. 

Frankly, the direct method can be pretty tedious and lead to headache-inducing data entry errors. It works well if you don’t have frequent cash inflows and outflows, so it’s a better option for freelancers or sole proprietors. Bear in mind that even if you calculate your cash flow using the direct method, you need to use the indirect method to reconcile the CFS with your income statement.

Cash flow statement indirect method

The cash flow statement indirect method requires you to pull up your income statement, where you’ll find your net income—your business’ bottom line. That number is your starting point. Then, you’ll need to make adjustments to the transactions listed on your income statement balance sheet that don’t truly reflect the movement of cash into and out of your bank accounts. 

Using the cash flow statement indirect method is more technical than the direct method. If you have a bookkeeper or accountant, this is likely the method they’ll use. If you want to get hands on with your finances as a small business owner, learning the indirect method can save you some time and effort when you’re generating a monthly, quarterly, or annual CFS yourself.

How to read a cash flow statement

Maybe your bookkeeper just emailed you your first official cash flow statement. Perhaps you’re feeling ambitious enough to try out the indirect method of calculating last month’s cash flow for yourself. Either way, congratulations are in order: prioritizing expense management and getting familiar with your financial statements is a rite of passage for any small business owner. But how the heck do you read this thing? 

Let’s walk through a simple cash flow statement template to give you a better idea of what you’re looking at.

At the top of the cash flow statement you’ll find the net income number that should match net income on your income statement. In this cash flow statement example, red numbers are subtracted from net income while black numbers are added to net income. 

It’s easier to read a cash flow statement if you know what’s going into it. The cash flow statement format includes three main sections: cash flow from operations, cash flow from investing, and cash flow from financing. If you were to prepare this cash flow statement using the indirect method, here’s how you’d fill out the three sections:

1. Cash flow from operations

First, you’ll calculate cash flow that comes from your everyday business operations. From your net income, you’ll need to add back transactions that reduce net income on the income statement but do not affect cash, including depreciation, amortization, decreases in AR, and increases in AP. 

You also need to subtract expenses that increase net income on the income statement but do not provide more cash, like the increase in AR and inventory purchases. 

In this cash flow statement example, we’ve listed depreciation, increase in AP and decrease in AR as additions in black and cash payments made to suppliers and employees and an increase in inventory as subtractions in red.

2. Cash flow from investing

Next, you’ll calculate cash coming in from investments, such as selling an asset or receiving returns from an investment into your bank account. You also need to subtract the purchase of investments or assets—like machinery, vehicles, appliances or property—if you paid by cash. 

Here, we’ve listed the purchase of equipment as a subtraction. However, if the business owner put this purchase on a credit card, they should include this amount in the total notes payable line in the month that they paid down the credit card balance. 

3. Cash flow from financing

Finally, you’ll add in cash received through financing, such as a loan balance or—for public companies—issuing stock, and subtract loan repayments, interest paid or dividends paid. Transactions related to business loans are listed as notes payable. 

In our cash flow statement example, the number is black because the business received a loan that counts towards increased cash on hand. When a repayment is made, that number would be listed in red and subtracted from the total.  

As you can see from this cash flow statement template, while the business had a net income of $75,000, the cash available in the business that month was $31,000. With this information, the business owner knows that they’ve only got $31,000 to cover payroll, pay their taxes and invest in the business at this point in time. 

Business owners should return to their cash flow statement monthly or quarterly to better understand and optimize their cash management. It’s important to note that positive cash flow isn’t always good and negative cash flow isn’t always bad. For example, this business spent money on equipment purchases. While this represents negative cash flow from investing, using extra cash on hand for new equipment is a good investment in business growth. 

On the other hand, having an excess of positive cash flow several months in a row could mean that you’re not allocating the cash available in your business effectively. Cash is best used for reinvesting in your business or earning interest. To make sure your cash is working hard for you at all times, it’s smart to keep it in a high-yield account like the one Float offers that gives you 4% interest on your balance.

Use Float to take control of your cash flow

It never hurts to have some extra cash on hand. Using business credit cards can give you more flexibility around your cash flow and empower you to seize opportunities even if your invoices haven’t been paid. 

Float combines corporate cards with intuitive expense management software. Providing Float cards for your team allows employees to pay with the company card, rather than paying expenses out of their own pocket. This means you can get real-time visibility into spend, rather than waiting on them to submit their receipts. You can also earn interest on the cash you keep in Float. 

With Float, you can track all of the expenses you put on your corporate cards in one place and seamlessly pay your vendors, subscriptions and employee reimbursements through a single platform. Float integrates directly with your accounting software, so incorporating expenses paid through Float in your cash flow statement is frictionless.
Get the cash you need, when you need it. Try Float for free and boost your cash flow with high-limit corporate credit cards and 4% interest on funds held in your Float Balance.

If you’re running a small business, chances are you’ve experienced cash flow problems at some point. The stress of not knowing if you’ll have enough to cover payroll, supplier payments, or office rent can keep you up at night. 

It’s frustrating to work hard, bring in sales, and see profits on paper, only to find yourself short when an unexpected invoice lands or an essential expense arises. 

You may feel alone in these struggles, but you have more company in that leaky boat than you realize. In Canada, 60% of small and medium-sized businesses (SMBs) report ongoing cash flow challenges. Look at your small business neighbours. Yep, they’re worried about this, too. This number is only slightly better for established businesses. According to Float data, 48% of SMBs that have been operating for 20+ years reported insufficient cash flow as a top financial challenge in 2024.

The good news? You’re not alone, and there are ways to take control. Plus, we get what it’s like running a small business in Canada. We’ve got you covered.

In this guide, we’ll walk you through the most common cash flow issues small businesses face, why they happen and—most importantly—how to solve them.

Common business cash flow problems

Cash flow problems are one of the biggest challenges small businesses face, and they can feel relentless. When cash runs low, every unexpected expense or delayed payment adds stress, making it feel like you’re always on the edge of a financial crunch.

Why are cash flow issues so common in small businesses?

A few patterns crop up when business owners dig into the dark corners of their cash flow management. (It’s okay, we brought flashlights.) Have a look at the list and see if these sound familiar.

Have you ever struggled with:

• Unpredictable revenue cycles that make it hard to plan ahead?
• Customers who delay payments, leaving you scrambling to cover your expenses?
• Large upfront supplier costs that tie up cash before you’ve even made a sale?
• Rising operating expenses that creep up month after month?
• Incomplete or poor financial forecasting leading to unexpected shortfalls?

Many small business owners feel like they’re constantly playing catch-up, shifting funds around and hoping nothing major goes wrong.

We get it. But hope isn’t a strategy. Understanding what’s causing your cash flow struggles is the first step to fixing them. So, let’s dig in together.

💡Pro Tip: Start with this guide to get the basics on all things cash flow management.

How many businesses in Canada fail due to cash flow problems?

Cash flow problems impact your financial stability, but beyond that, they also affect your peace of mind. Every small business owner knows the sinking feeling of realizing that despite solid revenue, cash is tight again, and making it through the month will require careful juggling. In fact, 29% of small businesses ultimately have to close because they run out of money, and 67% of small business owners rely on personal funds to keep things afloat—an unsustainable strategy in the long run.

Fears about keeping your business in the black aren’t unfounded. Almost 20% of business owners surveyed have faced past bankruptcy or insolvency. How high is the risk of a business failing? It can vary, but these are not easy times. In the first quarter of 2024, insolvencies were up 87% over the year before, with experts warning of a high number of quiet business failures hiding behind that number.

Small business cash flow problems can pose real risks for business owners. Even if your business seems to be bringing in new customers and making plenty of sales, these signs can hide real troubles. Learning how to solve cash flow problems could be crucial to your business building the longevity you’ve dreamed of.

Business types prone to cash flow issues

We hate to be the ones to say it out loud, but certain industries are more susceptible to problems with cash flow than others. Common culprits include those that require large upfront investments, have long payment cycles or experience seasonal fluctuations. 

What might this look like in your business? Common examples include:

Construction firms

Long payment terms and high material costs create cash flow gaps. You may end up trying to cover multiple payroll cycles (and even overtime) long before you’re paid for a job.

Retailers and wholesalers

Balancing your stock levels is a juggling act. Holding too much inventory ties up cash, while slow-moving stock leads to liquidity issues.

Agencies or companies with extended payment terms

If you’re a recruiter, you may not be able to bill your client until you’ve completed the placement of a candidate. Payment delays from clients can disrupt payroll and make it difficult to operate smoothly.

Hospitality businesses

You may have months where business slows to a trickle. Seasonal variations impact revenue consistency, making it hard to cover fixed costs during slow months.

Startups

More invoices and fees? We haven’t billed a single customer! If this thought has tightened the tension around your skull more than once, this could be you. Heavy upfront costs before revenue kicks in can leave early-stage businesses tight for cash.

If your business falls into one of these categories, proactive cash flow management is critical.

10 common cash flow problems (and how to fix them)

While cash flow issues are common, they’re not inevitable. Understanding why they happen will help you start taking proactive steps to regain control. With help, you can stabilize your cash flow and set your business up for long-term financial health.

Some of these challenges can be made easier with financial tools that give you better control and visibility over your cash flow. We’ll walk you through 10 common cash flow problems and solutions to help you tackle them.

1. Late customer payments

Many small businesses operate on tight margins, so when customers don’t pay on time, it can throw everything off balance—like famous Italian leaning tower levels of off balance. You still have bills to pay, employees to compensate and suppliers to keep happy. When you’re chasing overdue invoices, it takes time away from running and growing your business. 

Solution: Set clear payment terms, offer early payment discounts and use automated invoicing tools to follow up on overdue payments.

2. Revenue fluctuations

Not every business has steady income each month. Seasonal businesses or those affected by market shifts often experience unpredictable revenue cycles. You may have a great month followed by a slow one, making it tough to manage expenses consistently.

Solution: Build a cash reserve during peak periods, diversify revenue streams and forecast cash flow regularly.

3. Upfront supplier payments

Many businesses must pay suppliers before they generate revenue. This creates a cash crunch, especially for companies that need to invest heavily in inventory, materials or services before getting paid.

Solution: Negotiate better payment terms, explore just-in-time inventory management or use credit options to delay payments.

4. High overhead costs

Fixed costs like rent, utilities and payroll don’t go away, even when business slows down. If expenses keep creeping up while revenue stays the same, cash flow gets squeezed tight like a pair of too-skinny jeans.

Solution: Audit expenses, cut unnecessary costs and consider flexible lease options or remote work setups.

5. Poor financial planning

Many small business owners focus on sales and operations but overlook financial forecasting. Many have business acumen and strengths that may not include deep financial literacy. Without a clear cash flow plan that includes cash flow statements and other key financial planning documents, unexpected expenses or slow months can cause financial stress.

Solution: Use accounting software to track cash flow, create realistic budgets, and plan for potential shortfalls.

6. Expense management inefficiencies

Unmonitored spending by employees or disorganized expense tracking can drain cash reserves faster than expected. Without proper oversight, it’s easy to lose track of where money is going.

Solution: Implement an expense management system to monitor and control spending in real time.

7. Tax compliance surprises

Nothing disrupts cash flow like an unexpected tax bill, and with online access to everything, there’s no pretending anything got lost in the mail. Many small businesses underestimate their tax liabilities or miss filing deadlines, leading to penalties and financial strain.

Solution: Set aside tax reserves, use automated tax software and consult a professional accountant to avoid surprises.

8. Inventory mismanagement

Too much inventory means cash is tied up in unsold products, while too little inventory can lead to missed sales opportunities. Striking the right balance is essential.

Solution: Use inventory management software to optimize stock levels and reduce holding costs.

9. Emergency expenses

Unexpected costs like equipment breakdowns, legal fees or emergency repairs can drain your cash reserves overnight. Without a financial cushion, these expenses can be devastating.

Solution: Maintain a contingency fund and explore business insurance options to protect against unexpected expenses. You can even earn interest on those funds, if you opt for a high-interest yield account, like Float Yield, which offers 4%.

10. Access to credit

When cash is tight, having access to financing can make the difference between surviving and shutting down. But many businesses struggle to secure loans or credit lines when they need them most.
Solution: Establish good credit, explore business lines of c

How Float can help you manage cash flow with confidence

Float provides an all-in-one expense management platform that helps you track spending in real time, automate expense approvals and gain critical visibility into your financial health.

With Float’s corporate cards, you can set spending limits, automate receipt collection and prevent overcharges. This ensures that every dollar spent is accounted for and surprise expenses don’t catch you off guard. (Less panic means you get to spend a few weekends relaxing instead of transferring money around, hoping to cover everything.)

Float also helps you gain financial control by integrating corporate cards with real-time expense management. Unlike traditional solutions that encourage spending, Float is designed to help you spend smarter while offering up some pretty appealing rewards, like high-yield accounts. 

Proactive cash management is essential, but business cash flow problems don’t have to derail your business. The key is to stay proactive, monitor your finances closely and leverage the right tools to improve business cash flow management.

Looking for smarter ways to manage your business expenses? Explore how Float can help improve your cash flow visibility and control.

Looking to sharpen your bookkeeping skills without breaking the bank? We’ve rounded up 5 free online bookkeeping courses online that’ll help Canadian small businesses owners and finance teams.

Why Bother with Courses on Bookkeeping?

Let’s face it, training in bookkeeping isn’t the most thrilling part of running a business. But it’s crucial for:

• Keeping your financial records in order
• Making tax time less of a headache
• Understanding your company’s financial health
• Making smarter business decisions

So, let’s dive into these free online bookkeeping courses that’ll transform you from a numbers novice to a balance sheet boss!

Introduction to Bookkeeping and Accounting

Are you keen to grasp the essentials of bookkeeping and online accounting? The Open University offers a fantastic free online bookkeeping course that’ll set you on the path to financial wizardry.

Introduction to Bookkeeping and Accounting is a gem for anyone looking to:

• Master the numerical skills crucial for bookkeeping
• Understand the accounting equation and double-entry bookkeeping
• Learn how to record transactions like a pro
• Create balance sheets and profit & loss accounts

This course is completely free and self-paced. You can learn at your own speed, fitting it around your own schedule.

What’s included:

• 8 hours of study material
• Beginner level content
• A free statement of participation upon completion
• Option to earn a digital badge

Whether you’re a small business owner wanting to get a handle on your finances, or you’re considering a career change into accounting, this course provides a solid foundation.

Head over to The Open University’s website and create your free account. Your journey into the world of bookkeeping starts now!

Free Online Payroll Course: Master the Basics of Bookkeeping

Are you a small business owner or aspiring bookkeeper looking to get a handle on payroll accounting? Look no further! FreeBookkeepingAccounting.com offers a fantastic free online payroll course that’ll have you crunching numbers like a pro in no time.

This course covers all the essentials:

• The complete payroll process
• Understanding wages journals
• Fundamentals of payroll accounting
• And much more!

No registration required – simply scroll down and start learning at your own pace. Perfect for beginners, this course breaks down complex concepts into bite-sized, easy-to-digest modules.

Key topics include:

• Decoding payslips and key payroll terms
• The five main steps of the payroll process
• Creating and understanding wages journals
• Accounting for deductions and employer costs

Whether you’re looking to handle payroll for your own business or kickstart a career in bookkeeping, this free course is an excellent starting point. It’s packed with practical knowledge, clear explanations, and even includes visuals to illustrate key concepts.

ACCA’s Free Online Courses

ACCA (Association of Chartered Certified Accountants) is a globally respected body for professional accountants. They’re offering a treasure trove of knowledge to help you level up your career.

Here’s what’s on offer:

• Dive into the world of Machine Learning for Finance
• Master the basics with Financial Accounting and Management Accounting courses
• Get tech-savvy with Robotic Process Automation and Cybersecurity for finance pros
• Build a solid foundation with Intro to Bookkeeping and Management Accounting

The best part? These courses are completely free to audit, with the option to earn a verified bookkeeping certificate for a small fee if you want to showcase your new skills.

Intuit Academy Bookkeeping Professional Certificate

Are you looking to dive into the world of bookkeeping or level up your financial skills? Look no further than the Intuit Academy Bookkeeping Online Professional Certificate offered on Coursera! This comprehensive program is designed for beginners and career-changers alike.

Here’s why it’s worth your time:

• No prior experience needed – start from scratch and build a solid foundation
• Learn from industry experts at Intuit
• Flexible, self-paced learning – complete in about 2 months at 10 hours per week
• Earn a respected credential to showcase on your LinkedIn profile and resume

What You’ll Learn:

• Essential bookkeeping concepts and accounting principles
• Navigating the accounting cycle to produce financial statements
• Analyzing financial data to make smart business decisions
• Hands-on practice with real-world scenarios

While this course isn’t free, you can always apply for financial aid with Coursera. This bookkeeping program is included with a Coursera Plus subscription, making it an incredibly cost-effective way to invest in your future.

FAQ: Your Burning Bookkeeping Questions Answered

Q: Do I need any prior experience to take these courses? A: Most of these courses are designed for beginners, but check the individual descriptions for any prerequisites.

Q: Will I receive a certificate upon successful completion? A: Yes, some of these courses offer fairly sophisticated bookkeeping training and offer certificates upon program completion.

Q: Can I access course materials after completion? A: This varies by course. Some may offer ongoing access, while others might have time limits.

Q: Are these courses recognized by professional bookkeeping organizations? A: These free courses are great for personal development, but may not count towards official certifications. Check with professional bodies for accredited programs.

Q: How much time should I dedicate to these courses? A: Most courses suggest 3-5 hours per week, but the beauty of bookkeeping training online is its flexibility!

Grow Your Business With Float

Canada’s only finance & corporate cards platform that helps businesses save 7% on their spend and close books 8x faster.

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Ready to Balance Those Books?

Whether you’re a small business owner looking to get a handle on your finances or an aspiring professional bookkeeper, these free online bookkeeping courses offer a fantastic starting point. Remember, good bookkeeping is the foundation of a healthy business – so why not invest some time in building those skills?

From mastering the basics of the accounting cycle to tackling complex financial analysis, there’s a course here for everyone. So, grab a cup of coffee, fire up your computer, and get ready to dive into the world of debits, credits, and balance sheets. Your future financially-savvy self will thank you!

For more Canadian Business insights and best practices, follow Float’s Industry Insights content!

As much as some of us want to commit to reading books throughout the year, usually there isn’t enough time to read – maybe I will ask for an extra day in the week for Christmas? Here comes to the rescue, 🎙️ Finance Podcasts! Super convenient, easy to listen to, and you are able to multi task. The list is a mix of finance-only,  thought provoking, and leadership podcasts!

‍

Float Team’s Top Choices

LumiQ

1. With interviews with over 200 successful business leaders like
2. Jim Balsillie – Founder of RIM
3. Colleen Johnston – Former CFO of TD bankhttps://floatfinancial.com/platform/corporate-cards/
4. Michael Katchen – Founder of WealthSimple
5. Best part is you earn CPD while you learn from Canadian business leader

‍‍

‍Cloud Accounting Podcast – David Leary & Blake Oliver

1. Gives you a taste of part accounting and tech news
2. Updates and practices in the cloud accounting market
3. Mostly US focused but still very useful

‍

‍Accounting Best Practices – Steve Bragg

1. Steve Bragg covers essential information that actually matters to accounting professionals
2. Most episodes are between 7-10 minutes long with over 4.7 million downloads
3. Mostly US focused but incredibly powerful listen

‍

The A16Z Podcast – Andreessen Horowitz

1. A well known venture capital firm based out of Silicon Valley with companies their portfolio like Facebook, Slack, AirBnB, and 100s more
2. The finance podcast covers how innovation and technology is ever evolving and the way it impacts all of our lives
3. Featuring top industry and academic experts

Planet Money – NPR

1. NPR is a well known, respected, and credible media company that has a number of range
2. A finance favourite podcast as it is an easy listen that explored the global economy without you feeling like your in ECON101

Bonus: Retained Learnings – Float’s very own Finance Podcast!

1. Interviews with finance leaders operating the fastest growing companies in Canada
2. Special guests from the VC and PE background talking about the importance of finance for Founders
3. Hosted by Float’s CEO & Co-founder Rob Khazzam and multiple Guest Interviewers.

In each episode of Retained Learnings, we’ll share strategic advice and potential solutions to answer some of the finance departments most important questions. We’ll touch on topics like preparing to go public, hiring in a tight talent market, or even moving to an ERP solution like NetSuite.

If you’re a Canadian finance professional, curious about how the best finance leaders in the country do their jobs, be sure to listen to Retained Learnings. Now available on Spotify and Apple podcasts.

If we have missed any that you think are a MUST listen, email is at info@tryjournal.com and we will add it and share it!

Podcasts are a staple for myself on a weekly basis, same goes for audio books. Super versatile and you can multi task!

Float is Canada’s only all-in-one corporate cards, reimbursements, and bill pay platform that helps customers:

• Earn cashback on all categories and save on FX
• Generate 4% interest on funds held with Float
• Eliminate expense reports and receipt chasing
• Close the books 5x faster at the month-end

Want to learn how companies like Clutch, Neo, Knix, and 1,000s of other Canadian businesses on average save 7% of their monthly spend with Float? Get started with Float today by clicking the button below!

Learn About Float

Get Started for Free

Want to learn more before singing up? Book a demo today to learn more about the product from our team!

‍

Are you drowning in receipts and invoices? Losing sleep over GST/HST deadlines? You’re not alone. Many Canadian small business owners find themselves in the same boat when managing their finances.

Why Bother with Professional Bookkeeping?

Let’s face it: you didn’t start your business to become an accountant. You’ve got bigger fish to fry. That’s where bookkeeping services come in handy.

The Perks of Outsourcing Your Books

• More time to focus on what you do best
• Accurate financial records
• Insights to help your business grow
• Reduced risk of costly errors
• Stay compliant with CRA regulations

Finding the Right Fit: Bookkeeping Services for Canadian Small Businesses

Not all bookkeeping firms are created equal. Here’s what to look for:

1. Experience with Canadian small businesses: They should understand your unique challenges and tax obligations
2. Tech-savvy approach: Online bookkeeping services can save you time and money
3. Clear communication: No jargon, just direct communication about your finances
4. Scalable solutions: As your business grows, your bookkeeping needs will too
5. Knowledge of Canadian tax laws: Including GST/HST, provincial taxes, and corporate tax regulations

Online Accounting and Bookkeeping Services: The Future is Now

Cloud accounting services are changing the game for Canadian small businesses. Here’s why:

• Real-time access: Check your numbers anytime, anywhere
• Collaboration made easy: Work seamlessly with your accountant
• Automatic updates: Always have the latest features at your fingertips
• Bank-level security: Keep your financial data safe and sound
• Multi-currency support: Essential for businesses dealing with US or international clients

Note that while online bookeeping services could offer lower costs, they usually work best for simple business models. If your business has a unique revenue model, complex vendor relationships or P&L structure, it might be best to work with a human who can cater to your business needs.

What to Ask when Choosing a Bookkeeping Company?

1. What services do you offer?
2. How do you handle communication?
3. What’s your experience with businesses in my industry?
4. Can you provide references from other Canadian businesses?
5. What software do they use and is it compatible with the CRA requirements?
6. How do you stay updated with Canadian tax laws and regulations?
7. Which accounting systems do you work with?

How Much Should You Spend on a Bookkeeper?

How much should you shell out for bookkeeping services in Canada? Well, it’s not a one-size-fits-all answer.

Bookkeeping costs can vary widely based on:

• The size of your business
• The complexity of your finances
• The services you need
• Whether you opt for in-house, freelance, or online bookkeeping services

Here’s a rough guide:

• For small businesses, expect to pay anywhere from $300 to $2,000 per month.
• Freelance bookkeepers might charge $30 to $90 per hour.
• Online bookkeeping services often offer tiered pricing, starting from as low as $200 per month for basic services.

Remember, cheaper isn’t always better. A skilled bookkeeper can save you money in the long run by catching errors, maximizing tax deductions, and providing valuable financial insights.

Consider this: How much would it cost you to do it yourself? Factor in your time, potential mistakes, and the stress of dealing with the CRA. Suddenly, professional bookkeeping services start to look like a bargain!

Professional tip: Many Canadian bookkeepers offer a free consultation. Use this to discuss your needs and get a customized quote. It’s a great way to find a service that fits your budget and your business.

The Cost of Peace of Mind

Investing in bookkeeping and accounting services for Canadian small businesses might seem like a significant expense. But consider this: how much your time is worth, and what’s the cost of a major financial mistake or CRA penalty?

Online bookkeeping services in Canada often offer flexible pricing models to suit businesses of all sizes. From basic bookkeeping to full-service accounting, there’s an option for every budget.

Beyond the Books: How a Bookkeeper Can Boost Your Business

A good bookkeeper doesn’t help you reconcile your bank statements. They can be your financial advisor, offering insights to help your business thrive in the Canadian market.

• Cash flow forecasting: Plan for the future with confidence
• Budget creation and monitoring: Keep your spending in check
• Financial reporting: Understand your business’s health at a glance
• Tax planning: Minimize your tax bill
• GST/HST management: Stay on top of your collections and remittances
• Payroll services: Navigate the complexities of Canadian payroll taxes and deductions

FAQs: Your Burning Questions Answered

Q: How often should I update my books? A: Ideally, daily or weekly. But realistically, as long as you’re consistent, monthly updates can work too. Just ensure you’re prepared for quarterly GST/HST filings if applicable.

Q: Can online bookkeeping services handle Canadian payroll? A: Many do! It’s worth asking about when you’re shopping around. Make sure they’re familiar with CPP, EI, and provincial payroll tax requirements.

Q: I do business in multiple provinces. Can online bookkeeping services handle this? A: Many Canadian online bookkeeping services are equipped to handle inter-provincial business operations, including varying tax rates and regulations.

Q: How secure is cloud accounting for Canadian businesses? A: Reputable cloud accounting services use bank-level encryption to keep your data safe. Many also ensure your data is stored on Canadian servers to comply with privacy laws.

Q: What’s the difference between a bookkeeper and an accountant in Canada? A: Bookkeepers handle day-to-day transactions, while accountants focus on the bigger financial picture and complex tax matters. Many small businesses in Canada need both!

Q: Can a bookkeeper help me with my T2 corporate tax return? A: While bookkeepers can prepare the financial statements needed for your T2, it’s usually best to have a certified accountant review and file your corporate tax return.

Remember, good bookkeeping is the foundation of a healthy Canadian business. Whether you choose traditional bookkeeping services or opt for online accounting services for small business, the important thing is to get your finances sorted.

Don’t let the numbers hold you back. With the right bookkeeping support, you can focus on what really matters: growing your business and living your entrepreneurial dream in the Great White North.

While You Are Looking, Consider New Tools To Streamline Your Finances

While we’re on the topic of making your financial life easier, let’s talk about a game-changer in the world of business expenses: corporate credit cards.

Why Consider a Corporate Credit Card?

• Simplify expense tracking
• Improve cash flow management
• Earn rewards on business spending
• Enhance financial control and visibility

But not all corporate cards are created equal. That’s where Float comes in.

Float is Canada’s only all-in-one corporate cards, reimbursements, and bill pay platform that helps customers:

• Earn cashback on all categories and save on FX
• Generate 4% interest on funds held with Float
• Eliminate expense reports and receipt chasing
• Close the books 5x faster at the month-end

Want to learn how companies like Clutch, Neo, Knix, and 1,000s of other Canadian businesses on average save 7% of their monthly spend with Float? Get started with Float today by clicking the button below!

Learn About Float

Get Started for Free

Want to learn more before singing up? Book a demo today to learn more about the product from our team!

Running a Canadian small business? You need the right tools to stay sharp and in the know. Keeping tabs on your finances can be a real headache, especially if you’re a small business owner wearing all the hats. We’ve spent years putting accounting software through its paces, and we’re here to share the cream of the crop. We’ve ranked the best accounting apps for small businesses based on user-friendliness, features, and value for money.

Two standouts have earned our top spots:

• QuickBooks Online shines for small to medium-sized operations.
• FreshBooks is perfect for solo entrepreneurs and tiny teams.

Ready to find your perfect match? Let’s dive into the best accounting software for Canadian businesses, along with everything you need to know to make the right choice.

Top Picks for Canadian Small Businesses

Our Reviews of Each Solution

Quickbooks Online – website

QuickBooks Online has become a go-to accounting software for many Canadian businesses, and for good reason. This cloud-based solution offers a robust set of features tailored to meet the needs of small to medium-sized enterprises.

Key Features

• Invoicing: Create professional invoices and easily track payments.
• Expense Tracking: Capture receipts with your smartphone and categorize expenses automatically.
• Bank Connections: Sync with your bank accounts for real-time financial updates.
• Canadian Tax Support: Automatically calculate GST/HST and prepare returns.
• Payroll Integration: Manage employees’ pay and taxes (additional fees may apply).
• Reporting: Generate detailed financial reports to gauge your business health.
• Multi-User Access: Collaborate with your team or accountant in real-time.
• Mobile App: Manage your finances on-the-go with iOS and Android apps.

Who It’s Best For

QuickBooks Online is particularly well-suited for:

• Small to medium-sized businesses
• Service-based companies
• Retailers with inventory needs
• Businesses looking for scalable solutions

Its versatility and comprehensive feature set make it a solid choice for many Canadian businesses looking to streamline their accounting processes.

Xero – website

Xero is a powerful cloud accounting solution gaining traction among Canadian businesses. Known for its user-friendly interface and robust features, Xero offers a fresh alternative to traditional accounting software.

Key Features

• Bank Reconciliation: Automatically import and categorize bank transactions.
• Invoicing: Create and send professional invoices, with online payment options.
• Expense Claims: Easily track and manage business expenses.
• Inventory Management: Keep tabs on stock levels and costs.
• Project Tracking: Monitor time and costs for client projects.
• Payroll: Manage employee payments and taxes (through integration with Payroll.ca).
• Multi-Currency: Handle transactions in over 160 currencies.
• Financial Reporting: Generate customizable reports for better insights.
• Mobile App: Access your accounts on-the-go with iOS and Android apps.

Who It’s Best For

Xero is particularly well-suited for:

• Small to medium-sized businesses
• Companies with inventory management needs
• Businesses that work internationally
• Teams that value collaboration and need multi-user access

Its clean interface and strong feature set make Xero an attractive option for businesses looking for a modern, scalable accounting solution.

Canadian-Specific Features

• GST/HST tracking and reporting
• Integration with Canadian banks
• Compliance with Canadian accounting standards

While Xero is newer to the Canadian market compared to some competitors, it’s rapidly evolving to meet the specific needs of Canadian businesses. Its cloud-based nature means you’re always using the latest version, with updates and improvements rolling out regularly.

Freshbooks – website

FreshBooks is the only free accounting software that’s gained popularity among Canadian freelancers, small business owners, and service-based professionals. Known for its user-friendly interface and focus on simplicity, FreshBooks offers a refreshing approach to managing finances.

Key Features

• Invoicing: Create professional, customizable invoices with automatic payment reminders.
• Expense Tracking: Easily capture and categorize expenses, with receipt scanning via mobile app.
• Time Tracking: Built-in timer for accurate billing of hourly work.
• Project Management: Collaborate with team members and clients on projects.
• Client Portal: Provide clients with a secure space to view and pay invoices.
• Reporting: Generate insightful financial reports including profit & loss statements.
• Double-Entry Accounting: Ensures accuracy and is suitable for accrual accounting.
• Bank Reconciliation: Connect your bank accounts for automatic transaction imports.
• Mobile App: Manage your business on-the-go with iOS and Android apps.

Who It’s Best For

FreshBooks is particularly well-suited for:

• Freelancers and solopreneurs
• Service-based small businesses
• Agencies and consultancies
• Businesses prioritizing ease of use over complex features

Its focus on simplicity and strong project management tools make FreshBooks a go-to choice for many service-based professionals.

Canadian-Specific Features

• GST/HST tracking and reporting
• Integration with Canadian payment gateways
• Support for Canadian tax rates
• Compatibility with Canadian banks for bank feeds

The software’s strength lies in its simplicity and focus on the needs of service-based businesses. While it may not offer the depth of features found in some other accounting solutions, its ease of use and time-saving capabilities make it a compelling choice for many Canadian entrepreneurs.

Wave – website

Wave is a cloud-based accounting solution that’s made waves in the Canadian market, particularly among small businesses, freelancers, and entrepreneurs. Its standout feature? It’s free for accounting, invoicing, and receipt scanning.

Key Features

• Accounting: Double-entry bookkeeping system
• Invoicing: Create and send professional invoices
• Receipt Scanning: Capture and organize receipts via mobile app
• Bank and Credit Card Connections
• Financial Reporting
• Multi-Currency Support
• Customizable Sales Taxes
• Collaborator Access: Add accountants or team members

Paid Add-ons:

• Payments: Accept credit card and bank payments (pay-per-use)
• Payroll: Full-service payroll for Canadian businesses (monthly fee)

Who It’s Best For

• Freelancers and solo-preneurs
• Small service-based businesses
• Startups and new businesses on a tight budget
• Businesses with simple accounting needs

Canadian-Specific Features

• GST/HST tracking and reporting
• Integration with Canadian banks
• Support for multiple currencies, including CAD

Wave stands out in the Canadian market for its commitment to providing free, capable accounting software. It’s an excellent starting point for new businesses or those with straightforward financial needs. The software is continuously updated, ensuring users always have access to the latest features.

While it may lack some of the advanced features of paid software, Wave’s core functionality is robust enough for many small Canadian businesses. Its pay-per-use payment processing and affordable payroll services allow businesses to add features as they grow.

Sage 50 – website

Sage 50 (formerly known as Simply Accounting) is a comprehensive accounting solution tailored for small to medium-sized Canadian businesses. Known for its powerful features and deep functionality, Sage 50 is a go-to choice for businesses with complex accounting needs.

Key Features

• General Ledger: Detailed tracking of all financial transactions.
• Accounts Payable & Receivable: Manage bills and invoices efficiently.
• Inventory Management: Track stock levels, costs, and sales.
• Job Costing: Monitor expenses and profitability for specific projects.
• Payroll: Built-in Canadian payroll system with tax calculations.
• Multi-User Access: Collaborate with team members and accountants.
• Bank Reconciliation: Easily match transactions with bank statements.
• Fixed Asset Management: Track depreciation and asset values.
• Business Intelligence: Generate in-depth financial reports and forecasts.
• Customizable Dashboard: Get a quick overview of your financial status.

Who It’s Best For

Sage 50 is particularly well-suited for:

• Established small to medium-sized businesses
• Companies with complex inventory needs
• Businesses requiring detailed job costing
• Organizations needing strong audit trails
• Those preferring a more traditional accounting software approach

Its powerful features make Sage 50 a solid choice for businesses that have outgrown simpler accounting solutions.

Canadian-Specific Features

• Built-in Canadian payroll with up-to-date tax calculations
• GST/HST tracking and reporting
• Compliance with Canadian accounting standards
• Canadian-specific financial statements and forms

As a long-standing player in the Canadian accounting software market, Sage 50 is deeply attuned to the needs of Canadian businesses. It offers a level of depth and customization that many growing businesses find essential.

While Sage 50 is primarily a desktop solution, it does offer cloud access through Sage 50cloud, allowing for some of the flexibility of cloud-based systems while maintaining the robust features of the desktop version.

Choosing the Right Software for Your Business

Consider these factors:

• Your budget – pick the tool that you can afford first and foremost
• Business size and growth plans – make sure to choose something that will scale with your business. Switching accounting systems after the fact can be very time consuming and costly
• Needed features – research must-have features for your business needs (e.g., inventory, payroll).
• Ease of use – find something that you will feel comfortable with yourself.
• Give it a try – most of the tools offer free trials. Consider signing up on a trial and seeing if the software works for your needs.

Tips for Getting Started

If you still can’t decide on the right system, consider asking your bookkeeper for professional advice. Don’t have a bookkeeper? Consider our guide to learn how to find the best financial partner for your business.

If you don’t have anyone to ask for help, consider the following criteria:

1. Take advantage of free trials
2. Check for Canadian-specific features (like GST/HST tracking)
3. Read user reviews from fellow Canadian business owners
4. Ensure the software can grow with your business

Remember, the best accounting software for your Canadian business is the one you’ll actually use. Don’t get bogged down by fancy features you’ll never touch.

FAQ

Is there truly free accounting software for Canadian businesses?

Yes! Wave is a solid free option. Just be aware that some advanced features may come with a cost.

Do I need special accounting software if I’m a freelancer?

Not necessarily. Simple options like Wave or FreshBooks often suffice for freelancers and solo-preneurs.

Can I switch accounting software mid-year?

You can, but it’s best to do it at the start of a fiscal year to avoid complications.

How often should I update my books?

Aim for at least monthly updates, but weekly is even better for staying on top of your finances.

Finding the right accounting software can transform how you manage your Canadian business finances. Take the time to explore your options, and you’ll be on your way to smoother bookkeeping in no time.

Other Critical Accounting Tools – Spend Management Software

While accounting software forms the backbone of your financial management, there are other tools that can further streamline your business operations. One such crucial tool is spend management software.

Enter Float, a Canadian company offering innovative spend management solutions. Float’s platform is designed to work alongside your accounting software, providing real-time visibility and control over your business expenses.

Float is Canada’s only all-in-one corporate cards, reimbursements, and bill pay platform that helps customers:

• Earn cashback on all categories and save on FX
• Generate 4% interest on funds held with Float
• Eliminate expense reports and receipt chasing
• Close the books 5x faster at the month-end

Want to learn how companies like Clutch, Neo, Knix, and 1,000s of other Canadian businesses on average save 7% of their monthly spend with Float? Get started with Float today by clicking the button below!

Learn About Float

Get Started for Free

Want to learn more before singing up? Book a demo today to learn more about the product from our team!

As a business owner, you understand the importance of maintaining accurate financial records. Regular bookkeeping audits are essential for ensuring the integrity of your financial data and making informed business decisions. By establishing a consistent audit schedule and following best practices, you can stay on top of your finances and avoid potential pitfalls.

In this article, we’ll explore the concept of bookkeeping audit frequency and provide guidance on determining the right audit schedule for your business. We’ll also delve into the specific steps involved in conducting monthly reviews, quarterly audits, and annual comprehensive audits. By the end, you’ll have a clear understanding of how often you should audit your books and the benefits of doing so.

What is Bookkeeping Audit Frequency?

Bookkeeping audit frequency refers to the regular intervals at which a business reviews its financial records to ensure accuracy and compliance. This process is crucial for identifying discrepancies, maintaining financial health, and preparing for potential external audits or tax obligations.

How to Determine the Right Audit Schedule

Establishing a consistent audit schedule is vital for maintaining financial accuracy and compliance. Consider factors such as business size, transaction volume, and regulatory requirements when setting your audit frequency.

Use the bookkeepers guide to understand industry standards and best practices.

1. Monthly Bookkeeping Review

Conduct a monthly review to catch any irregularities early. This practice helps in understanding trends and making informed decisions.

A monthly review is also essential for verifying that all transactions are recorded accurately, aiding in fraud prevention.

2. Quarterly Financial Audits

Perform a more comprehensive audit quarterly to assess the overall financial health of your business.

Quarterly audits provide a more detailed analysis, allowing for adjustments in financial strategy and ensuring compliance with audit compliance guidelines.

3. Annual Comprehensive Audit

An annual audit involves a thorough review of all financial records and systems.

This audit is crucial for preparing financial statements, identifying long-term trends, and confirming compliance with all regulatory requirements.

Use resources like the float bookkeeper guide to streamline the audit process and ensure thoroughness.

Frequently Asked Questions

How often should you audit your books in a year?

Ideally, conduct monthly reviews, quarterly audits, and a comprehensive annual audit for optimal financial management.

What are the benefits of regular bookkeeping audits?

Regular audits help in early detection of discrepancies, informed decision-making, and preparation for tax obligations.

What steps are involved in conducting an internal audit?

Establish a schedule, gather necessary documents, review for accuracy, and rectify discrepancies.

How can auditing your books improve financial accuracy?

Auditing ensures that all transactions are recorded correctly, identifies errors, and enhances overall financial transparency.

Best way to audit your books is with Float

Using modern tools can significantly ease the auditing process. Automated platforms enable seamless tracking and analysis of financial data, ensuring compliance and accuracy. Explore solutions that offer real-time insights and streamline the entire bookkeeping audit process.

Streamline Compliance With Float

High limit corporate cards in both CAD and USD, perfectly paired with intelligent software that saves businesses 7% on their spend.

Sync all of transactions and receipts to your accounting system

Require employees to submit receipts and set GL codes per transaction

Maintain a centralized audit log of expenses, receipts, transactions, and expense approvals

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Struggling to locate your business incorporation number? You’re not alone. Many entrepreneurs find themselves scratching their heads when it comes to this crucial piece of information. Let’s dive into what a business incorporation number is and how you can track it down.

What Is a Business Incorporation Number?

A business incorporation number, also known as a corporation number or CRA number, is a unique identifier assigned to your company when it’s officially registered. Think of it as your business’s ID card.

Why It Matters

• Legal requirement for various business activities
• Needed for tax purposes
• Essential for opening business bank accounts
• Required when applying for loans or grants

What Is the Difference Between a Corporation Number and Business Incorporation Number?

In Canada, a corporation number is a unique identifier assigned to a corporation when it is registered with the federal or provincial government. This number stays with the company throughout its existence. A business incorporation number, on the other hand, refers specifically to the number assigned when a business is incorporated under the federal or provincial laws. While both numbers are linked to legal registration, the business incorporation number specifically relates to the incorporation process, whereas the corporation number identifies the entity for tracking purposes in government systems.

How to Find Your Business Incorporation Number?

Your business number is assigned by the CRA shortly after incorporation. You can find your business number through a free Government of Canada search or by consulting Canada’s Business Registries.

Your corporation number is assigned by Corporations Canada or a Provincial Business Registry upon incorporation. You can find your corporation number through a free Government of Canada search or by consulting Canada’s Business Registries. This number may also be referred to as your Registry ID. If you have both a business number and a corporation number, please provide your corporation number.

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What Does Corporation Number Look Like?

A CRA program account number has three parts:

1. the nine-digit BN to identify the business
2. a two-letter program identifier code to identify the program account
3. a four-digit reference number to identify an individual program account (since businesses can have more than one of the same kind)

Example

You start a sole proprietorship. You need a GST/HST program account if you need to charge GST/HST. If you have one or more employees, you will also need a payroll deductions program account.

Once registered, your business will receive a:

BN:

• 123456789

GST/HST program account number:

• 123456789 RT 0001

Payroll deductions program account number:

• 123456789 RP 0001

If your business does not receive the information, you will need to check that the program accounts were registered properly. If your business needs to confirm their account number(s), you will need to contact the CRA.

Note
If the business later incorporates, you will need to register for a new BN. This will generate an RC program account for corporation income tax and you will need to add other CRA program accounts that you require (RP, RT). You will then close the sole proprietor BN accounts if you do not need them for any other businesses that you operate. For more information, go to Corporation income tax program account.

Things to Remember:

• Don’t confuse it with your tax ID number (they’re different!)
• Beware of scam websites claiming to provide this info for a fee
• Double-check the number’s format – it varies by country

FAQ

Is my business incorporation number the same as my tax ID?

Not always. In some countries, they’re separate numbers. Best to confirm with your local tax authority.

How long does it take to get a business incorporation number?

It varies, but typically you’ll receive it within a few days to a few weeks after registering your business.

Can I change my business incorporation number?

Generally, no. This number stays with your business for its entire life.

What if I can’t find my business incorporation number anywhere?

Don’t panic! Contact your local business registry or corporate affairs office. They can help you retrieve it.

Remember, your business incorporation number is a key part of your company’s identity. Knowing where to find it and how to use it will make your business operations smoother. Keep it handy – you’ll need it more often than you might think!

While the days of the ledger book, and hand recording of sales and expenses are long gone, companies still need to have a 360 view of their accounting. With accounting automation, finance teams can use software solutions to accurately and quick complete tasks that otherwise would take hours or days every month.

Manual Accounting vs. Accounting Automation

With traditional accounting, many tasks are still manually completed. Data is still entered by a person on the finance team. Bank statements are still reconciled manually. Even suppliers are paid one at a time as they send invoices, and wait for the payment to be issued.

With the help of software solutions, accounting automation replaces those time-consuming activities, and allows finance teams more time to work on tasks that move the business forward.

Drawbacks of Manual Accounting

While the time it takes to keep the books up-to-date is often the biggest drawback of manual accounting, there are other disadvantages that many business owners should consider.

Higher Potential for Errors

When you have a stack of invoices to enter, it’s hard to get every detail exactly correct, every time. You might get interrupted by a phone call and miss a line, or you might not notice that the disbursement item was non-taxable. Did this invoice charge GST, HST or QST? Even the most diligent team member will transpose numbers or choose the wrong GL account.

Time Required

Manual accounting tasks take up valuable time that could be used for higher-value work. Think about your highly trained finance team – would you rather have them manually code individual transactions or focus on more strategic projects, like implementing a new ERP system or bringing payroll in-house?

Not only do the individual transactions take longer to manually enter, but the reconciliation process is often quite painful. 

How do you compare and verify the completeness of two sets of transactions? If it’s a set of books and the bank statement, it’s often an exercise in “ticking and tying”, sometimes with printed copies and multiple colours of highlighters. 

Obtaining and documenting approvals is another time-consuming process, especially as most non-finance folks don’t feel the urgency of month-end the same way the finance team does. Multiple manual reminders are common, and sometimes reminders are sent after the approval or support was obtained – the records just weren’t updated, or it wasn’t saved in the right spot yet.

What CFOs and Controllers Look for In Accounting Automation Software

As a finance team leader, finding ways to address some of the common concerns around cash flow, business growth, and profitability is a constant consideration. Accounting automation can solve for many common accounting activities, and address many of the concerns around time, errors, and security. It can also free up time for more valuable activities.

General Ledger Automations

General ledger accounting software easily aggregates financial data across different lines of business, and allows companies to structure business transactions and data to generate financial reports. Some modern general ledger accounting software options include automations for the following:

• setting pre-defined GL accounts for certain vendors instead of trying to remember or checking the process documentation each time to confirm
• connections to live bank feeds to reconcile throughout the month instead of waiting for the formal statement
• setting pre-defined rules for common bank transactions instead of manually creating a journal entry for the bank charges every month

Payroll and Employee Expense Reconciliation

Payroll software easily calculates wages, taxes and generates reports, but often there are still many manual inputs. Some modern payroll software options include automations for the following:

• onboarding paperwork that can be securely completed by the new employee and flow into the database, instead of manual data entry
• time off requests automatically routed to the appropriate parties for approval and vacation days automatically connected to payroll processing, instead of forgetting to forward the email chain or update the excel tracker
• direct integration with your accounting software OR templates to create custom journal entries that you can easily export and import into your general ledger system

Employee Expense Reimbursement

Ensuring your employees get paid, and their expenses reimbursed quickly, can be a lot of work. There is typically at least some confusion about how to fill out the expense report, what codes to use, and the receipt submission process often involves reminders and a lot of follow-ups. Then expense reports need to get approved (sometimes by more than one person) and submitted for payment processing. 

Modern employee expense options use accounting automation to make this process efficient and easy, saving time and money, and giving employees a much better experience than filling out dreaded expense reports. 

Employee expense accounting automations can include:

• pre-defined rules or limited options for employee expense codes to minimize or eliminate the need for non-finance team members to choose a GL account
• the ability to process individual transactions in real-time, instead of waiting for a time-consuming (and often-late) monthly expense reports
• automatically routing expenses for review and approval (some systems accommodate complex policies)
• automatically send out requests and reminders for receipt submission

So what is the best Reimbursements product for Canadian businesses — consider Float’s Reimbursement Solution.

Accounts Receivable and Payable

Even if your accounting records are paperless, they might still be difficult to access. What was the filename? Which folder is it in?

Modern accounting automation tools store data in the cloud, often attached directly to the related transaction, usually with generous storage limits (or no limits at all). 

Cloud-based document storage facilities give you:

• data at your fingertips when analyzing financial statements. Many general ledger systems have drill-down capabilities where you can click through right to the original supporting document to confirm something is in the right place
• easy auditor access. Instead of pulling invoices and receipts when the auditors provides you with their sample list, give them read-only access to your cloud-based systems and let them find the information for themselves
• maintaining records as required by Canada Revenue Agency

Cash is king, and anything that adds time to the Accounts Receivable process can impact critical cash flows. Modern accounting automation options for Accounts Receivable include:

• scheduled and recurring invoices for predictable revenues
• automated statements or overdue invoice reminders sent to clients
• integrated payment links to make it easier for customers to make payments

Successful businesses need to pay invoices on time and on budget. Modern accounting automation options for Accounts Payable include

• automatic routing of invoices for approval
• pre-defined GL codes for specific vendors
• automatic reconciliation with online payment providers instead of making the payment and separately needing to record the payment
• automatic comparison to budget and purchase order if applicable

Looking to automate your Accounts Payable and other finance workflows, checkout our review of the Best Accounts Payable Solutions for Canadian Businesses in 2024.

How Float Automates Your Accounting

Float’s business finance platform adds significant automation to employee expense and accounts payable processes, along with additional unique features. 

Capture receipts automatically

No more chasing employees for receipts! When you swipe a Float card, cardholders get prompted to submit their receipt via our mobile app, text or email. Finance teams can even set up rules to auto-pause cards when someone is not compliant. Once you try it, you will never go back to manual receipt collection.

Pre-Code Virtual Cards to The Correct GL Account

When you issue a virtual or physical corporate card through Float, you’re able to automatically pre-program the specific GL accounts that card will be assigned to be able to spend from. This means that your finance team won’t need to spend hours chasing down expense reports and issuing payments – the spend will automatically be recorded in the correct account.

Reimburse Employees for Our-of-Pocket Expenses

Whenever your team needs to spend, but they don’t have a Float card on them, you can use Float’s Reimbursements to capture expense reports and payout to your team directly to their bank accounts.

Automate Accounts Payable

Float’s latest product called Bill Pay enables anyone to automate the accounts payable by seamlessly capturing and approving invoices, and initiating EFT, ACH, and Global Wire payments.

Best Platform to Automate Accounting – Float

Float is Canada’s only all-in-one corporate cards, reimbursements, and bill pay platform that helps customers:

• Earn cashback on all categories and save on FX
• Generate 4% interest on funds held with Float
• Eliminate expense reports and receipt chasing
• Close the books 5x faster at the month-end

Want to learn how companies like Clutch, Neo, Knix, and 1,000s of other Canadian businesses on average save 7% of their monthly spend with Float? Get started with Float today by clicking the button below!

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