As smaller businesses will know, cashflow is key to ensuring the success of your business. Without proper management of cash inflows and outflows, small businesses risk insolvency, loss of customers, damage to reputation or failure to pay suppliers. One issue that many smaller businesses suffer from is inaccurate cashflow predictions due to inaccurate or out of date data. Therefore, for all businesses, especially smaller ones, it is imperative that they review their current cashflow reporting setup to see if they are getting accurate and live data from them.
A good starting point to achieve better cashflow management is through cloud storage of invoices, as this reduces the risk of losing documents that contribute to your cashflow data. The second step to this is to look for a cloud system that can then extract the invoice data and present it as live information in real-time. This gives business owners the ability to review invoices and see when costs and income are coming from, live, as opposed to well after it has happened. This is key as it improves a businesses’ ability to adjust and review spend and be far more agile with their planning. There is also the added bonus that invoice deadlines are far less likely to be missed which can increase a business’s reputation with suppliers and reduce costs through better spend management and planning.
But cashflow management is about more than just income vs. outgoings, it is about why trends are happening, how you should react to them and what you can improve in order to either increase income or decrease spend. This is why having access to real-time data is so important to small businesses. In addition, you should consider what types of reports you wish to see and what analysis you expect to take from them. For example, if you are looking at which supplier is costing you the most, you should consider why this is and what viable alternatives there are. After all, there may be legitimate reasons why they are the highest cost supplier or there maybe no viable alternative meaning you can not look at the initial data in such a binary way.
In conclusion, smaller businesses need to review their cashflow in a much more dynamic way, taking into account multiple areas and acting on live and relevant data. Having a clear strategy with relevant reporting that they can trust. By doing this they can be far more likely of success.
To find out more about the latest technology available to small businesses, get in touch with our team.