The importance of consistent cash flow cannot go overlooked in the business circle. It is considered by most professionals to be more important than any profit on paper. Inconsistent cash flow or deceleration in a business’s cash flow is one of the primary reasons of business downsizing and laying off employees. It is vital to work on establishing consistent cash flow if you wish to retain your current growth or plan to expand. Furthermore, without cash flow, you cannot pay your employees on time that in turn, leads to poor employee performance.
Improvement in cash flow usually does not get to be on the agenda of business owners. Their concern lies principally around the day-to-day operations instead of devising ways to enhance business performance. You can work diligently to predict and manage cash flow, but unless and until you are not focusing on new ways of generating revenue, your cash flow will not improve. It, in turn, can hurt your business and its growth.
Business owners should be aware of the importance of technology in presenting new avenues of growth and consist of performance. Growth of technology has been momentous in the last decade and a half; many businesses came into being because of technology. Therefore, it makes perfect sense to harness the power of technology in improving cash flows.
Not every business owner can be expected to know how technology will facilitate an increase in cash flow. Therefore, it will serve the business owners better to hire advisors who specialize in this domain. They can educate the business owners on the technology that can increase the cash flows and prevent cash flow deceleration. If you have a small business and you aspire to ensure its survival in the market, then you have to educate yourself on the cash flow management techniques.
Technology paves the way for a business’s cash flow towards stability and increase. Here are some tips to improve cash flow and make use of three dimensions of cash flow, i.e., timing, direction, and amount.
Electronic Payment System
An electronic payment system involves payment or transactions through an automated system that makes checks and cash obsolete. This system gained tractions with the widespread acceptance and use of the Internet or online banking.
This system attracts more clients towards business because of the ease and convenience of payment. Efficient and low-cost transactions make the customer’s preferred mode of payment and trade, ensuring smooth cash flow within seconds and minutes. The ease of use of this payment system attracts more customers or clients; therefore, it is in any business’s favor to adapt to this system to improve its cash flow.
Lockbox banking is a service different from conventional backing, but the banks provide it to companies to receive customer payments.
It is a service provided by banks to companies for the receipt of payment from customers. Banks assign a special post office box to a specific company, and when a customer makes a payment, it goes directly to the post office box instead of to the company. The bank then retrieves the refunds from the crate and after the necessary processing, deposits the payments into the bank account of the company that had registered with them. This technology is useful for those businesses that receive customer payments through mail checks and are unable to make timely deposits, thus compromising cash flows. Lockbox banking ensures a cash flow consistent with a business’s sales.
If you start using a single-use account to process your payments, it will ensure the timely and full amount of the services offered by your business. It involves generating a 16- digit exclusive virtual account number for every payment. There is a different number for every separate amount. It means that the single-use account does not have any further use after payment has been made, thus no delays or similar hitches. With these, the amounts are delivered to business owners much earlier as compared to conventional methods. This method also helps generate electronic remittance data that allows the business owners to track the cash flow.
Data Tracking Software
You should consider using data-tracking software or cash flow management tools to keep track of your business’s cash flow. Opt for applications that sync with other accounting tools that you have been using. There are tools available to predict daily, weekly, monthly, and annual cash flow. Keeping abreast of the anticipated changes can help you devise strategies that can improve your cash flow.
Invoicing software tools have expedited the payment process. Tracking and processing payments have become ever more accessible because of the availability of software. As a consequence, the payments are received by the businesses quicker. This improvement in cash flow makes it possible for the firms to invest in expansion or any other service that requires cash.
Technology has proved to be an excellent combination for the owners of small businesses who deal with online trading. Something as simple as launching an e-commerce website has helped small businesses create a customer base that otherwise would not have been possible without a considerable investment. E-commerce sites have proven to be beneficial for not only small companies but established businesses with brick and mortar facilities have also reaped benefits from launching such sites. It’s much easier for a lot of people to shop online, pay online through a credit or debit card, and receive the required product or service. It is not very costly to maintain an e-commerce website, but it does result in accelerated cash flow. Whether you are a small or medium or mega business owner, there are many ways to improve your cash flow.
Technology has made inroads in every field and has been the reason behind the success of small businesses. Those following conventional ways have realized that they will only be able to stay in the area if they adapt to technological tools. Even mega corporations can face failure if they do not keep pace with technology.