Improving Cash Flow

December 2, 2015 | News

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Accurate, up-to-date information is essential for understanding the flow of money through your business which will lead to good cash flow management. Data needs to be pulled regularly from a variety of sources, from online eCommerce sites and warehouse stock, to CRM systems and Sage, and then made easily accessible or distributed to the relevant people. This can be a time-consuming, laborious task. However, with an automation solution in place, providing the ability to push and pull data and automatically generate reports, it can provide you with real-time, accurate information, delivered to your inbox or any chosen system.

This solution is particularly relevant for stock management. As businesses are now required to sell via a multitude of channels, monitoring stock levels can be time consuming and prone to errors. Automating the sharing of data between systems can alleviate this and ensure that everyone in the business is aware of product available.

Receiving payment for goods and services is the main objective of any business but is quite often the main cause of poor cash flow. The ability to manage and understand customers is essential. Customer profiling and credit control procedures are therefore a must to ensure procedures are adhered to, cash flow remains consistent and the cost of debt recovery is significantly reduced.

From the outset, you need to know whether or not a customer is credit worthy. Reducing your exposure to bad debt can be achieved by gathering this intelligence from credit referencing services, Companies House or other valuable data sources, so that your credit limit decisions are based on the very latest available information. These manual checks take time to process both in the first instance and as the relationship develops. However, it is possible to integrate your financial software with these online data services.

When an account has been created, you then need to constantly monitor and evaluate. Just because the sales team think that a customer is important due to revenues, it may not actually be a profitable account. Ironically, you may find that some of your larger accounts are actually the ones causing the headaches. Does the customer have a bad history of paying? Are you constantly having to chase for payment?

Launching a credit control system doesn’t have to be complicated, but it’s essential to put someprocedures in place. The basics include setting clearcredit limits and payment terms for your customers,sending out invoices promptly and firmly chasing alldebts when due. You should also stay on top ofcustomer payments and be quick to stop offeringcredit to bad payers.

Establishing, monitoring and enforcing appropriate purchase order authorisation processes within a business is also critical to financial stability. Yet the process of authorising a purchase order for many still remains a manual process - automating the distribution of single or multi-level purchase order authorisation requests can significantly improve productivity, remove administration and enforce company procedures.

Cutting costs will have the most beneficial impact on cash flow. Streamlining business processes by automating numerous manual tasks will free up resources, help speed up transactions and improve your cash flow.

If you’d like to find out how our Alerts and Notifications pack for Sage 200 can enhance your day to day business processes or improve cash flow, sign up to our webinar now

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