For a business to be successful, it's important that its financial health is in good shape, and that means maintaining a healthy cash flow. For small businesses particularly, poor cash flow can be disastrous, even leading to the business having to close. One of the key reasons that businesses can struggle with financial health is due to the way that they collect payments. This results in late payments which have a negative effect on cash flow.
The introduction of automated payments and the benefits which can be expected to accrue have been widely discussed and were once again on the agenda at the Accountex North Conference in Manchester, UK last week. Introducing automated payments has been demonstrated to be an effective way to improve cash flow, and the business’ financial health. Using an automated payment platform to collect payments can reduce the stress on a finance team charged with chasing bills, and the time spent managing difficult customer relationships with ongoing conversations to chase payments.
Ultimately as a small business, you need to be in control of your cash flow and maintain stability. Automated payments can introduce a level of predictability because they allow you to pull payment from a customer at the time it is expected, rather than wait to be in receipt of the payment through more traditional methods such as standing orders or bank transfers.
Whether you are an accountant in business or in practice, it's important that you understand what current methods are available to you to help a business maintain a healthy cash flow. There are numerous platforms/software available to help improve cash flow through automation, so it's worth spending time reviewing your current methods. Introducing some form of automation can help to improve on what is already in place.