manage cash flow

Manage Cash Flow in Real-Time with RnD, Xero and Stripe

5 min read

The goal of every entrepreneur is to get past the bootstrapping phase and to experience the relief of no longer having to beg, borrow or steal advice, time or resources.

In this phase, the biggest issue is not knowing fully what you owe or what you’re owed, and how to break that down into meaningful metrics on your financial statements so you can make better management decisions.

manage cash flow

The reality is that efficient cash flow management is really only possible if you have your accounting ducks in a row and follow more closely the accepted accounting standards and guidelines.

It used to be that a company would need to grow large enough to afford building or buying a license to an ERP (Enterprise Resource Planning) software in order to accomplish that coveted status because the system connected all of the logistical, managerial and financial dots.

Now, we don’t have to wait for a company to grow large enough to afford an ERP. We can jerry-rig one by integrating multiple apps – all at a relatively affordable price.

The advantages of a faux-ERP now being made available to the small business owner are often the missing puzzle piece to ensuring their successful launch.

The more automation of tasks and synchronization of data, the more time the company has to devote to selling its products and services. This can now be a reality for the small companies through the proper utilization of the cloud-based softwares that share data.

The best approach coworking spaces can follow to improve cash flow management, is to use a coworking management software that has a direct integration with the accounting software and merchant service. Our personal favorite combo is OfficeRnD + Xero + Stripe, and I’ll explain why.

Meet the integrations trifecta:
OfficeRnD, Xero and Stripe

For the small business, obtaining any semblance of GAAP, IAS or IFRS used to be a joke. They were happy with being on the cash basis on the books because owners kept a running total in their head of how much they were owed and owed.

Data entry for AP or AR was something the owners did nights or on the weekends, or saved for a later phase in their growth whenever they could hire someone to do it. (I even recently took on a client who never bothered to enter data, and used to throw away their bills once they paid them!)

cash flow management

Automating AR data entry

Apps like HubDoc will scan in the bills and post them to the accounting software, which solves one part of the equation. OfficeRnD has a two-way integration with Xero, so it will post the invoices to Xero when they’re created and will solve the other part of the equation.

This covers the basic requirement of being on the accrual method, but a wrench is often thrown in when you’re toggling between the two apps trying to reconcile which invoices in Xero have been paid or not.

That’s where Stripe comes in.

Utilizing up-to-minute data to easily predict cash flow

Using Stripe as your merchant service for billing is a great solution because Stripe integrates directly with OfficeRnD.

So now, whenever a member’s invoice is paid, not only will it be marked as paid in OfficeRnD, but it will also be marked as paid within Xero in real time. Now you’ll be able to look at Xero’s awesome dashboard and see the amount that’s actually currently due in your sales corner, instead of waiting on the bookkeeper to catch up the coding.

Another way that Stripe will save you time on your bookkeeping and ensure you are utilizing the most up-to-the-minute data for easily predicting cash flow: when the Stripe integration is set up in OfficeRnD, the system will automatically create a new Stripe Clearing asset account in your chart of accounts.

predict cash flow

When an invoice is marked as paid by Stripe, it not only removes the invoice item from the AR account but also posts the funds in transit amount to that new clearing account so that you recognize the asset on the balance sheet.

This allows you to then know precisely what money is coming your way, versus what you’ve already got in your bank.

Then, when the deposit comes through the bank feed, you code that credit to this same Stripe Clearing account to offset the debit transaction posted by Stripe. The revenue item would have already been recognized whenever the invoice was created from OfficeRnD, as long as your mapping between the two apps was setup properly.

So voilà: the accounting of your entire accounts receivable process will be thoroughly complete and accurate according to accepted accounting standards – and all of it will have been done effortlessly through the integration of these three apps – what I call the “Trifecta of integrations.”

About Pencil

Pencil, Inc. was founded in 2008 and has grown into a team of entrepreneurs, bookkeepers, and accountants that help small businesses outsource operational tasks such as bookkeeping, running payroll, and remitting tax filings and payments.

They’ve helped a number of coworking spaces maximize the efficiency of their team’s workflow by utilizing technology to make the most informed management decisions, as well as play the role of an outsourced partner for maintaining their accounting. Pencil take on the administrative tasks that coworking spaces don’t have time to do, so their team can focus on their members and running their spaces.