Digitize Your Cash Flow Processes

Digitize Your Cash Flow Processes

Why should you digitize your cash flow processes to have the best control over your cash? Why is it especially important now?

Keeping on top of your cash flow is even more important during tough economic times. With a global slowdown on the cards, energy prices soaring, and supply chain challenges, cash will likely be tight over the coming year and beyond. Cloud technology and fintech apps can give your business the best possible control over its cash.

Why is cash flow so important?

To keep your business operating, you need enough money coming into the business to cover your outgoings. Together with enough surplus cash to deliver a profit. When a recession begins to hit, this can significantly impact your income.

Consumers will have less disposable income to spend on your products and services. Business customers will be looking to reign in their spending on suppliers. As a net result, your business will likely make fewer sales and bring in smaller revenues.

This means:

Reduced income coming into the business
Less cash in the business to cover your operational expenses
Not enough money in the bank to pay suppliers, utility providers, or payroll costs
In the worst-case scenario, insufficient cash flow for you to continue trading.

What can you do to improve your cash flow situation?

The more informed you are about your cash position, the more you can do to prepare for any cashflow gaps. This foresight can make all the difference when you’re battling against tough external economic forces and a downturn in sales.

If you want to safeguard your cash flow, these are some sensible steps to take:

Switch to cloud accounting – accounting and finance technology has progressed greatly in assisting business digitize their cash flow processes. The latest cloud accounting platforms offer detailed reporting of your cash position. These software tools generally provide real-time data, giving you up-to-date cash numbers.
Integrate with cashflow forecasting apps – cloud accounting platforms let you add third-party apps to create a custom app stack of helpful business tools. There are plenty of cash flow forecasting apps to choose from, allowing you to predict your future cash flow position.
Plan for the cashflow gaps – when your forecast shows a shortfall of cash coming up, that’s the time to take evasive action. If you see a cash hole approaching next month, it’s time to look at ways to raise extra finance to fill that hole. That could mean extending your bank overdraft, taking out a small business loan, or taking out an invoice finance facility with a lender.
Look for opportunities to cut your overheads – one way to even up your cash flow is to cut down on your expenditure. If you can cut back on overheads, expenses, and unnecessary costs, this can help you re-balance your cash position, even when cash flow is tight. Look for cheaper suppliers. Buy in smaller quantities. Take every opportunity to cut costs and keep your spending more sensible.
Update your prices and your sales strategy – raising your prices is one way to bring in more cash with the same sales volume. But it’s a balancing act. Putting your prices up can alienate existing customers and could see you losing customers. However,if you can find the sweet spot for your pricing AND drum up more sales, you can quickly increase revenue and give your cash inflows a healthy boost.
Review your cash flow reports regularly – it’s important to look at your cash flow numbers and reporting regularly. Don’t wait until just at period-end. This is particularly important when economic times are tough. With the most current cash information to hand, you can make informed business decisions to keep the business operational.

Talk to us about updating your cash flow processes

With your business in a healthy cash flow position, you give yourself solid financial foundations for riding out the global recession. No business is invulnerable in these conditions, but with liquid cash in the business, you have more flexibility and more capital with which to play.

Book a meeting, and let’s see how we can help you digitize and improve your cash flow processes.