Technology may be advancing and changing, but the value of strong cash flow isn’t

Technology may be advancing and changing, but the value of strong cash flow isn’t

Digital transactions and evolving financial technologies have dominated digital transformation in recent years. And while these developments are helping businesses to work smarter, cash flow management remains critical. The fundamental principles of monitoring cash inflows and outflows help businesses ensure that their finances are strong so they can meet their ongoing operating expenses and plan investments in growth.

The role of cash flow in every business

Strong cash flow is the lifeblood of every business, making it crucial for survival and growth. Not only does cash flow reflect a company’s ability to meet its financial obligations, but it can also enable (or hamper) the business’s ability to invest in operations and pursue growth. Positive cash flow ensures liquidity, allowing companies to pay bills, salaries, and debts promptly, bolstering credibility and trust. It also influences investment decisions, helping leaders decide whether to expand, innovate, or conserve resources. Inadequate cash flow can lead to missed opportunities, lower sales, or even bankruptcy. Monitoring cash flow is essential for businesses to navigate economic fluctuations, manage risks, and seize growth opportunities, ensuring sustained viability and success.

Technology gives you visibility over how and when you will get paid 

Using integrated payment technology to manage the end-to-end payment process should give your business full visibility over cash flow through interactive dashboards and data-driven insights. The objective is to see exactly what levers need to be pulled to address cash flow gaps proactively.

One of the biggest questions businesses have when it comes to cash flow is, “When will I get paid?” and understandably so. While some problem customers may continuously pay late, there are things that suppliers can do to gain greater control over how and when they get paid. These include:

  • Making it easy to pay: Don’t rely on disjointed, manual processes to send and receive invoices. With integrated payment systems and most accounting systems offering eInvoicing and card payments, businesses have more technology than ever to leverage in making it easy for customers to pay.
  • Clear payment terms: From the invoice issue date and due date to what is owed, all terms on an invoice should be clear. This ensures there’s no guesswork for the customer in reviewing their accounts. Even small changes, such as giving each product or service a separate line item, can make invoicing simpler and clearer.
  • Provide multiple payment options: Customers should be able to choose from a range of payment options, including EFT payments, credit and debit cards, virtual credit cards, payment by instalments, and more. By offering a range of payment options, you create a better payment experience, strengthening customer retention.

Understand the customer’s challenges and needs

Every customer has unique needs. The systems and processes adopted to adapt to a dynamic environment over the last three years have driven uptake in digital payment technologies. Implementing technologies that benefit your business, its customers, and suppliers is key to maintaining healthy cash flow. The technologies that companies prioritise should include those that make it easy for parties to collaborate on every transaction.

Embrace technology to turn accounts receivable into a strategic powerhouse

There’s an opportunity for CFOs and other financial leaders to continuously improve how accounts receivable operates at an operational and strategic level. Operating with a specific set of principles ensures this area of the business begins to drive better cash flow across the company. Some of these principles include strong order-to-cash policies, streamlining invoicing processes so they are customer-centric and easy to understand, using technology for digital transformation to unlock efficiencies and boost cash flow, and working collaboratively with sales and customer service teams.

Use technology to strengthen decision-making

Understanding what the business needs to spend, when it’s going to spend, and ensuring this is aligned with the company’s short- and long-term priorities are essential to maintaining strong cash flow.
This enables finance teams to proactively identify spending that can be deferred, freeing up cash flow for other opportunities. Having full visibility over your cash flow with data-driven insights enables you to make these decisions and have peace of mind that they will keep moving the business forward with strong and stable cash flow.

Whether you’re looking to boost your cash flow to smooth out fluctuations in your outflows and inflows or your business plans to invest in a growth initiative, maintaining strong cash flow is critical. Technology plays an important role in making this possible by helping you gain more data to drive stronger decision-making and visibility over your business’s finances. From automating accounts payable and accounts receivable processes to making it easier for customers to pay, using integrated payment technologies alongside a consistent focus on positive cash flow will set up your business for long-term success.