How tools to manage expenses and payments can help keep businesses buoyant
Whatever the region and no matter the size of the business, the underlying message is the same – cash flow can kill a business. In fact the issue accounts for anything between 40 and 90 percent of all business failures. Whatever the actual figure is, stats don’t generally lie but pose the question: are we doing everything we can to ensure we minimise the risk and improve cash management?
While much of the blame is pointed at traditional banks for not agreeing to extra lending quickly enough, the real scourge of course is not keeping a tight rein on spending and not developing or adhering to accurate forecasts. Understanding where any business finances are at any given point is essential to ensure competent decision making and profitability.
The problem many companies have is that they are using outdated methods of dealing with payments, expenses, invoicing and reporting or even worse have no planned approach at all. It slows down the ability to react, to access revenues and redistribute in the event of unforeseen circumstances. It also offers little in terms of up-to-the-minute analysis.
So what should businesses do? First and foremost, it’s about identifying key factors and seeing how digital tools can help make those factors not just possible, but excel to the point where they become essential. Fundamental to all of this is the ability to forecast, but you can’t forecast if you don’t have an accurate picture of what is going on.
By managing spending businesses can ensure that every expense is understood and considered as essential. The best way to do this is through a digital expenses platform and integrated payments tools, both of which should almost by default improve a business’s approach to how it manages cash flow. By having an immediate oversight, through live reporting of all spending from business cards and invoice payments, as well as balances and credit limits across departments and individuals, businesses can foresee potential problems more quickly and react accordingly.
Keep hold of money longer
It also enables management to categorise spending and therefore see where costs are spiralling out of control or where they need to set cash flow targets to ensure solvency. Cards can be cancelled or at least suspended quickly and easily and without the rigmarole of going through the issuing bank, while invoices can also be automated, to streamline business payments. This means businesses can effectively keep hold of money longer and at the same time pay creditors more quickly.
Digitally transforming the business expenses and payments, covering everything from receipt capture through to invoicing and automated payments means there will always be a digital trail that can be collated and reported on quickly and easily. This also means that at any moment in time, management can use fresh data to accurately forecast cash flow, leading to no more nasty surprises and hopefully less business failures.