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Managing your money

5 signs your cashflow management is stuck in the past

Once upon a time, manual cashflow management was the order of the day. However, it’s becoming increasingly apparent that in this day and age, old school methods alone no longer cut it. The way you deal with your money needs to be fast, fluid and efficient. Why waste precious time scribbling down the side of an aged debtor report, or scrambling for a post-it note reminder when you can load up a computer screen or open a mobile app in an instant? Here are five ways failing to modernise the way you monitor your cashflow is robbing you of both time and money.

1. There is always, always room for human error, even for the very best credit controller

There’s only so much strain your in house credit controller can take. Manually chasing debtors on a consistent basis can be both time consuming and difficult. Piling all your cashflow management onto the shoulders of one member of staff is likely to result in an inevitable human error down the line. After all, there are only so many invoice induced meltdowns one can take. Without a computerised system or cash management tool in place they’re bound to miss something. Relieve your credit controller of their hefty load by purchasing some easy to use, intuitive software. Although these may come with installation costs and training time to navigate, the return on those investments will prove more than worthwhile.

2. It hampers your ability to cashflow forecast accurately

Accurate forecasting is a key part of strategically managing any business, big or small. Without a system that logs all your figures in one place, from expected income to disputed payments, your forward planning always involves a degree of unhelpful guesswork. Relying on paper-based processes or excel spreadsheets for a cashflow forecast, though admirable, is ultimately dated and error prone. You need real time visibility and as formulaic an approach as possible to ensure the future of your business is well understood and more importantly secure. Invest in a digital cashflow forecast model which allows you to tap into your existing budgets and scenarios to map out a detailed business strategy which you’re completely confident in.

3. It becomes a nightmare for a credit controller managing multiple clients

That overdue invoice for KFC from six months ago? The payment scheduled to land in your account tomorrow from those unreliable pen suppliers? A stinging email reminder which you need to send out at 12:31 today? Without some form of software in place it’s very easy to get your wires crossed. You need to turn a crowded contact book into an accessible database of clients. Better understanding each individual relationship, from past transactions to contact information, means your credit controller can find solve problems within minutes. A programme with a clear, uncluttered lay-up can make all the difference in the wider scheme of your cash flow management.

4. You save time on pointless admin

According to a survey by YouGov in 2013, the UK’s small and medium-sized enterprises waste more than £42.2 million per day in revenues looking for documents. There’s no joy in rummaging through old records and frantically searching through folders on your laptop to find an old invoice or financial document. The time and energy spent navigating a dated cashflow management system (or lack of a system at all) could very easily be spent getting to the nitty gritty of business development and cashflow forecasting.

5. It takes longer to chase up payments

Chronic late payments are part and parcel of running a business, but they do not need to be. According to; SMEs “spend an average of 130 hours per year chasing overdue invoices – detracting valuable effort and resources from core functions.” Long stretches without payment and even longer stretches spent chasing those payments are detrimental to your accounting ledger. Moving things into the digital realm and harnessing the power of fintech is a surefire way to cut down on the days credit controllers spend scrambling after debtors. The future for cashflow management is bright, but only if you tap into it first.

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