Author: Craig Such, Managing Director, Azzure IT
I have witnessed first-hand that the small to medium business community are investing for growth. However, with the constant feed of economic upheaval and Brexit uncertainties, organisations are also working hard to manage their cash closely.
Whether you’re bulking up reserves to manage future growth or trying to build up reserves, finance departments must be obsessed with looking after every penny – making cash work hard.
So, why can cash management seem so hard? The principles of cash management are well documented and relatively simple. It comes down to having the right tools – providing the information needed to make the right decisions?
If you’re flicking from one screen to another, comparing spreadsheet to spreadsheet – wondering why the numbers don’t add up – maybe it’s time to review the accounting or ERP solution you’re using to manage your finances? Here’s a quick outline of the key functionality you should seek to control your cash flow:
– Simplified cash management is what’s needed – you need to create a cash flow calendar that lets you look back (or ahead) – simply by selecting a day, week or month, to see exactly how your funds flow in and out of your business.
– You need to clearly see your actual cash, as well as all your deposits or debits across all your bank accounts, with bank integration and reconciliation tools that are simple to use.
– You need to be sure your customers are paying you on time. You need the ability to track collections, to keep tabs on accounts receivables and make sure you’re getting paid as quickly as possible. What would be useful is a simple, out-of-the-box report that could pull a list of customers with balances over a particular threshold (of your choosing) – allowing you to prioritise and evaluate their history, You’d be able to see at a glance if any balance issue is a one-time occurrence or a trend you need to address.
– Managing a business is all about making smart decisions – from marketing, to inventory, to customer credit limits, to discounts and payment terms – to bring down costs and turn margins into cash flow. When you make fast, informed decisions it has a direct impact on your bottom line.
– You need to optimise your resources and improve end-to-end processes to increase your profitability. This can be achieved using predictive analysis tools.
– You can increase staff productivity and drive accuracy by automating your purchasing processes – using order-point minimums and maximums, as well as built-in workflows.
– You must streamline supply-chain processes and inventory management whilst reducing operational costs company-wide, with the ability to maintain the right stock levels and track turnover.
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