One Word Matters: Cash

The clamoring need for businesses today is to achieve a sustainable cash flow and to keep businesses from underwater. Fund flow is crucial to keep companies up and running – supplier payments, raw-material purchases, employee payments, utilities ... this list is never-ending, and the need for cash becomes a lifeline for any business.

With the global economies heading towards a deep crisis, businesses are on the brink of financial turmoil - companies that are quick to accept, adapt and act, have a fair chance to keep the business needle moving even during these turbulent times. A diligent effort is required from stakeholders across institutions to delve deeper into the aforementioned thought and get on terms in managing their businesses and funds smarter. 

The financial convictions should stretch beyond P&L statements and must investigate the actual cash flow into the business. Irrespective of the industries, be it – MSP (managed service providers), BSP (business service providers), B2B SAAS selling to enterprises, manufacturers, or distributors, the need to realize the locked/trapped cash and efficiently free up the cash flow is paramount to optimize business operations.  

Cash is linked to three resources 

1. Earnings from operations 

2. Working capital associated with inventories and receivables 

3. The sale of assets. 

All three elements are crucial and should be pursued aggressively, however, one needs to relook at the economics of the business. During tight macroeconomic situations, companies are more likely to experience distressing situations - high operational costs, profit deteriorations, and inventory & accounts receivable piling up. A shift in the paradigm is vital at an organizational level where every team should work towards a unified goal focusing on – liquidity, profitability, and growth as top priorities. 

Every sale must be weighed against the attractiveness of the deal margin and the amount of cash likely to get tied between the inventories & receivables and an estimated time to free up the cash. Business operations that were once evaluated only against the ROI will now have to rethink and contemplate the scales of cash consumption, cash generations, and how quickly these can be realized. 

The set of impediments that overarches the cash flow crisis could be extremely overwhelming for many businesses, the cash that is trapped in – delayed payments, slipping customer commitments, lack of ownership in the collection, and lengthy manual processes are the locked up liquid assets that in other ways could favor - investments, reduce debts, plan expansions and fund a myriad of other potential growth opportunities. 

While the sales team runs the show by acquiring voluminous deals, it has less emphasis on the deal margins, credit extensions, timely payments, and discounts offered. The entire challenge of retaining this acquired customer is shouldered by the accounts receivable (AR) team by handling both the cash and customer relationship in the right balance. Despite the important role an AR team plays, it is still underrated and unappreciated within the finance sector, a cultural change is required to acknowledge and respect every effort taken by this team to keep businesses in the game.   

Managing and handling tens of thousands of invoices for a long list of clients could be tormenting, the need of the hour is to make accounts receivables a flexible and seamless process instead of a pain filled mundane job. Easing on the AR process will open multiple opportunities across businesses as the hustle of cash collection is simplified and well organized thus streamlining efficient fund flow into the business. 

Using an Accounts Receivable automation platform will enable you to narrow your focus on one thing – getting paid faster. 

Making facts your friend is what Kapittx does best. When it comes to reducing Days Sales Outstanding (DSO ), the SaaS platform gives you a factual view of what’s working and what is not, and why? It helps you establish a successful cause-and-effect relationship between customers’ accounts payable cycle, invoice life cycle management, and collective ownership. 

Kapittx will enable your collection teams and sales teams to collect payments faster and more efficiently than before. Experience how Kapittx will speed up the payments and reduce DSO by more than 30%.

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