When it comes to financial management as a business, cash flow is everything. And, the large transition from brick and mortar to digital storefronts over the last decade has affected popular cash flow management trends. It is increasingly important that your company stays up to date with the latest cash flow trends so you can remain efficient and competitive.
Luckily, we have outlined some of the top current cash flow trends for businesses of all sizes. See how you can update your cash flow management to make your financial systems even more efficient.
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Top 5 Trends in Cash Flow Management
As businesses are navigating the digital landscape and transitioning online to keep up with current technology, there are some trends in cash flow management that they should be aware of. These tips can help you incorporate modern, technology-forward trends into your financial systems and increase efficiency overall.
1. Digitizing Your Cash Flow Management
Throughout the past few years, there has been increased pressure on businesses to switch their cash flow management systems to a digital, internet friendly model. There are plenty of options for online cash flow management tools allowing businesses of all sizes to take advantage of cloud-based finance management.
Digitizing your cash flow management can make your employees’ lives easier and also help your business automate profit forecasting accurately. If you haven’t moved towards cloud-based cash flow management, it may be time to start the transition.
2. Payment Efficiency
A good cash flow management system can balance both incoming profit and outgoing expenses. But, that can be difficult if you are waiting on customer invoices to be paid. However, businesses can use invoice factoring to make their cash flow management quicker and more efficient.
Working with a factoring company allows you to get access to your profit quickly, usually within a few business days. The fees associated with this are usually small – 1%-5% of your total invoice amount. Invoice factoring is a great way for small to medium sized businesses to make their payment system more efficient.
3. Investing in Security Concerns
The first thing that comes to mind when thinking about financing is oftentimes security. After all, you’ll want to ensure your business’s cash is safe and secure. That makes security a top priority when it comes to cash flow management.
As technology continues to advance, there is more opportunity to invest in securing your business’s financial data. Many companies are starting to use machine learning tech to reduce errors, increase efficiency, and catch fraudulent activity.
4. Increased Mobility & Flexibility
As we move towards incorporating more technology into our business practices, companies inherently become more mobile and more flexible. Business owners are spending less time tied down to a brick and mortar location and more time increasing their online presence.
As your business’s online reach increases, you have more opportunity to become both more mobile and more flexible. There are applications that allow customers to do just about anything online. Keeping up with this trend will allow your business to continue to grow and thrive in an online environment.
5. No More Spreadsheets
Many businesses used to rely heavily on spreadsheets to keep track of their cash flow. While they can be a great tool to use in some cases, there is too much room for human error to track something as important as profit. Additionally, there is no fool-proof way to audit your finances.
However, moving to an automated cash flow system allows your business to track your finances accurately. This can help you save money on labor, optimize tracking for incoming and outgoing invoices, and allow you to view future profit forecasts.
6. Less Business Credit Available
As both businesses and financial institutions navigate the large changes made within the industry, it is becoming more difficult to secure business loans and lines of credit from banks. Especially for start up businesses, it can be difficult to secure a loan.
So, in the last few years, we have seen businesses move away from small business loans and lines of credit and work towards securing financing elsewhere. That means businesses are working on a tighter budget with less overhead and getting creative with their spending.
Final Thoughts on Cash Flow Management
Cash flow management is arguably one of the most important parts of running a business. You need to be able to budget well in order to turn a profit. So, as we continue to rely more on technology, your cash flow management systems should evolve as well. Overall, updating your cash flow management systems can help make your business more profitable, efficient, and secure.
What cash flow management trends did we miss? Let us know in the comments!
