Small businesses are increasingly using technology across disciplines to grow, attract top talent, and sell products and services. So, applying a digital approach to cash flow management is a natural next step. Four types of tech, in particular, may prove invaluable for improving your business’s cash flow efficiency.
1. CRM Software
Customer relationship management (CRM) software is useful for maintaining customer records, but there are more applications to CRM for small businesses. CRM software can improve cash flow by improving your sales records, and by ensuring that your business focuses its energies on the most profitable activities consistently. For example, that may be attracting and converting a new customer base or taking proactive steps to retain existing customers.
Automating cash flow systems may yield multiple benefits. First and foremost, it’s a time-saver. Rectifying accounts becomes streamlined when your accounts payable and accounts receivable systems are automated.
Automation can also make it easier to monitor cash flow within your business accounts. If your cash flow system is centralized, you can easily see – at a glance – how much cash you have on hand and what payables or receivables are still outstanding.
Additionally, automating can make settling accounts easier for your customers and vendors. When payments to vendors are automated and customers are able to receive and pay invoices via auto payments, it’s possible to smooth out cash flow bumps and know when money is coming in or going out.
3. Virtual Accounts and Digital Payments
Virtual account management is a way to manage multiple business financial accounts under a single umbrella. Your virtual account can be tied to various physical bank accounts in order to act as a gatekeeper. Payments to vendors and payments received from customers move through the virtual account, making reconciliation less of a hassle and resulting in fewer banking fees.
Accepting digital payments through virtual accounts provides another tech-driven cash flow enhancement. Allowing customers to pay using PayPal, Apple Pay, Google Pay and similar payment apps can make settling invoices more convenient and it may offer the added bonus of allowing you to avoid expensive credit card processing fees.
4. Data Analytics
Big data analysis isn’t just for large corporations; small and medium-sized enterprises can also leverage data analytics for improving cash flow.
By analyzing trends in your payables and receivables data, you can generate more accurate cash flow forecasts. Specifically, you can drill down and see how something such as developing a new product or implementing a price change might affect your cash flow. Data analysis can also help you identify and plan for seasonal dips in cash flow, or find out-of-the-ordinary activity that could impact cash flow negatively. Bottom line, data analytics can help you be more insightful when it comes to cash flow management.