Keeping track of all your payments, incoming and outgoing, is a major part of the cash flow management process. Incoming cash is made from payments received from clients, vendors, asset sales, loans, and interest on idle cash in the bank. Outgoing cash consists of payrolls, invoice payments, daily operation expenses, and bill and interest payments to various parties. 

The strategy and leadership must take a closer look at all of these to get a stronger hold on the cash flow management to shorten the cash conversion cycles and make cash from sales faster than before. Releasing payments from your side as soon you receive services and sending out invoices immediately after making a sale is essential to speed up the cycle. 

No matter how well you know a client or your personal relations with them, you should never extend your credit timelines for anyone. Keep it professional and demand payments exactly when it was agreed upon during the sale. Sending reminders to your clients at regular intervals to remind them of upcoming payments. If you extend credit for one client, it is sure to open up the floodgates, and many more of your clients and vendors will ask for such extensions, and your cash conversion will suffer in the process.  

You can renegotiate with your vendors and service providers about restructuring your payment schedules to stabilize the the cash you have in hand. Though it is always good business to disburse payments as soon as you receive a service and helps builds good relations with partners, you can try negotiating if you have a cash crunch.  

Turning over your sales inventory is a very effective way to shorten your cash conversion cycle. The faster you drive up sales and manage your inventory better, the more money comes into your banks and converts into an actual money-making business. You can even integrate CRM software into your system to keep track of your inventory in real-time and stay on top of your game. Do not keep inventory management for the last moment; pre-plan your steps with a good look at your business process overview.  

Your bank will help you manage your holdings better to get better cash liquidity, speed up your asset sale process, and help in amping up business. There are treasury management options that can help you in your cash collection process from clients and vendors alike. This will further help you assess your financial risks and take measures to mitigate them before they become a major hurdle for your business.  

You can start asking for up-front payments and immediate release of funds when you are running low on cash. You can also use an automated AR system to fasten the process. This will also help with smoothening your supply chain system and getting cash into your bank accounts much faster than before. Do not negotiate with your clients on payment terms, and you can even start fines for making late payments or bounced checks. This will push them to pay on time and help in your CCC process.  

Amidst the pandemic and the sudden growth of tech use in business, companies across the world are automating their back office work. From cutting costs to getting faster results, an automated system can have a lot of advantages. One of the biggest areas of interest is the automation of Accounts Payable (AP) to avoid loss of funds and monetary discrepancies from human errors.  

According to Business Insider, anautomated Accounts Payable process cuts costs by 81%.That is some big savings to push you towards automation.  

Maybe your business is actually ready to take the first step towards automating your Accounts Payable system. But there are multiple pitfalls in the process that you might not be prepared for. These might actually turn out to be really costly mistakes when it comes to the future of your company. 

What exactly are these pitfalls that can become grave mistakes? How do you know them and make plans to avoid them? Worried about the next steps? Read on to get a better grasp of the situation.