If you run a small business, especially one in which you’ve empowered others to spend company money, you know how important it is to manage your cash flow. It comes down to a question of solvency: Does your business have enough short term cash to meet its obligations, including debt payments due throughout the next several months. One of the unfortunate things about most debts is the big monthly repayment that always seems to threaten your cash balance. We say most debts, because as we’ll explain below, some loans, like the ones offered by IOU Financial, avoid mammoth monthly payments altogether.
A debt tracking tool, which centralizes information about debts and debt payments, is therefore an excellent idea for the busy owner on the go. The tool can take the form of a downloaded computer program, online software, or a mobile app:
- Computer program: You can purchase or rent financial management software, such as QuickBooks, that provides debt tracking functionality, along with a host of other features. If you use a computer-based accounting system, you should be able to generate reports about cash and debt, but they might be less timely.
- Online software: A program like Mint provides information about your upcoming bills and warns you if your cash is running low.
- Mobile apps: Several apps exist for tracking debt, including Debt Tracker, LearnVest, Unbury.me and others. These have the advantage of always being available, even if you aren’t at your computer. Mobile wallets not only include debt information, but also provide mechanisms to make payments.
Functionality
So, what should a debt tracker do for you?
- Accounts: The program should have full information about each debt account, including account number, method of payment, payment calendar, interest rate, outstanding balance and so forth. It should be able to sort the account display by various criteria, such as date, amount of next payment, interest rate and more.
- Payments: Debt trackers should be prepared to give you full information about each payment you make, including penalty fees and interest. Comprehensive trackers also serve as a means to schedule and make payments, by generating online checks or performing real-time bill payment.
- Cash management: Trackers should be able to report your available cash and near-cash reserves, and alert you whenever a payment will create a low-balance or overdraw situation. You would like a tracker to suggest the order in which to pay off debts, according to criteria that you set, such as remaining balance or interest rate. A nice feature is to have an earmarking function, in which you allocate a portion of cash inflows to specific objectives, such as building up a fund to act as equity for a property purchase. Naturally, part of cash management is to report who owes you money and when to expect it.
- Usability: A debt tracker, whether standalone or a function of a larger system, should meet certain usability standards. It should be easy to operate, secure (using encryption, PINs, etc.), offer flexible reporting, and, if you choose, a method to make payments. Ideally, the tracker will be integrated with the rest of your company’s financial data, including all payables and receivables.
The Joy of Daily Repayments
We mentioned earlier how monthly debt payments require you to ensure you have sufficient cash when the payments come due. That’s a major benefit of debt trackers. IOU Financial takes a different, and better, tack. Instead of hitting you with a monthly lump-sum repayment, we evenly spread your payments over all the business days within the month, and we automatically debit your bank account so that you don’t have to take any special steps. Your debt tracker will show you how your balance goes down gently each day. IOU Financial can lend your business up to $150,000 in as little as 24 hours, so contact us today to experience the joy of daily repayments.
