A steady flow of cash ensures that a business is able to pay employees, suppliers, rent, rates, taxes, and other operating expenses on time. However, most businesses do not have enough cash in hand when they need it. That is why a cash flow crisis is one of the leading causes of business failure. Thankfully, we have 5 suggestions for your company, as it is possible to avoid a cash flow crisis with proper planning.
Have A Cash Flow Forecast
Making regular and precise cash flow estimates is one of the most critical things any business can do to anticipate difficulties. With accurate forecasts and predictions, a company can make better decisions on time and stay away from a passive position. You should begin by compiling a list of assumptions and how to handle them in each situation. For example, if there is a rise in raw material costs, how much will you charge your clients to balance your cash flow? Including precise forecasts in your business plan will not only help you operate your company more successfully, but also increase your credibility with banks or investors if you seek external finance.
Evaluate Your Financial Situation
Evaluating and updating your firm’s financial situation on a regular basis can help businesses to deal with sudden changes better and avoid crises. Is your current cash enough to be able to pay your necessary obligations if sales suddenly drop by a quarter? Such questions can help you have a bird’s view of your current cash flow.
You can seek digital tools to aid you in evaluating your financial situation. For instance, Synergix ERP System Consolidation eliminates the time-consuming and arduous task of creating your consolidated financial statements. No matter how large your company is, how many companies, and what charts of accounts you need to combine, you can rely on it to deliver the most up-to-date results. Different enterprises operating in different home currencies can also be consolidated. It handles the elimination entries for receivables, payables, sales, and inventories automatically.
Enhance Your Workflow
Improving your core business operations is also one thing firms can do to avoid a cash flow crisis. An ERP system for accounting management contains time-saving tools which automate your accounting and streamline the data entry process. It also enhances financial management, solves cash flow issues, and simplifies complex accounts payable and receivable procedures. With the ERP software’s Financial Management module, you can simply acquire, track, and analyse financial data from many departments. It may also generate financial statements such as balance sheets and profit and loss statements. All of this automation makes it simple to collect data across the organisation and use it to better run your business.
Simplify Inventory Management
Once you have control of what is in your warehouse, you will understand which are the best sellers. Hence, you will not mistakenly spend money on producing the unsalable product and drive yourself to cash flow shortages.
Accordingly, effective inventory management relies heavily on visibility. Businesses can benefit from controlled purchasing thanks to real-time inventory updates given by ERP software. You can use purchasing and planning statistics, as well as online queries, to decide the optimum time to refill. Efficient inventory planning allows you to acquire control over your inventory and avoid mistakenly producing a surplus.
Last but not least, make time for your finances. Cash flow management is critical for any firm, but it is especially important during times of uncertainty and volatility. With cash in hand, your company can weather impending storms and lay the groundwork for long-term success. Make financial planning a priority. Follow the advice we have given you so far, but do not forget to seek professional help whenever and wherever you need it.
Synergix Technologies, as a PSG pre-approved vendor (by IMDA), offers our clients comprehensive and customised ERP solutions with up to 70% funding to help them optimise their operations. We will be there for you throughout the Productivity Solutions Grant (PSG) and Enterprise Development Grant (EDG) application procedures. Contact us today to adopt an ERP system for your business and begin your digital journey!