Two thirds of small and medium-sized businesses have been offered payment terms of 90 days or longer in the last six months, so it’s little wonder managing cash flow is seen as a constant struggle by many entrepreneurs. But efficient management of expenses, especially for travel, can reduce this problem significantly, and there a number of things you can do to make this easier.
1 Free up your credit lines
Don’t squander your main credit line by using it to plug holes in your cash flow - you can make operational changes to free up money instead. For example, a third party payment provider can pay suppliers on your behalf but doesn’t require payment for up to 58 days. This can significantly help to improve cash flow, and also strengthens your relationship with suppliers. That leaves you free to use your main source of finance to invest in growth.
2 Keep track of expenses
If you don’t keep on top of what’s being spent then ‘surprise’ bills can make managing cash flow a huge challenge. Something as simple as automating expenses – either through use of commercial cards or within existing systems – can give you a better sense of what’s being spent and earned, making it easier to manage cash flow.
3 Refine your travel and entertainment policies
Creating or updating travel and entertainment expenses policies lets you specify preferred suppliers. This not only ensures consistency across all travel arrangements but also means you’ll know how much things will cost ahead of time. Approving incurred expenses during the claims process instead of pre-approving spending is also a useful term to include in expense policies, to give your team a sense of accountability and make sure there’s no unwelcome surprises.
4 Better forecasting
A greater understanding of how outgoings are spent today can help you make a better plan for the future. Expense management tools can help you track trends such as potential overspending or excessive ordering. Having accurate information management systems and forecasting in place ultimately leads to tighter financial control resulting, hopefully, in more opportunities for investment and growth.
5 Negotiate with suppliers
Getting better prices from your suppliers is a good way to improve cash flow. The data from expense management systems can flag any areas where costs are too high or inconsistent, which then allows you to consolidate suppliers across all business travel and puts you in a stronger position to negotiate preferential rates in the future.
Partnering with a provider that offers the tools to free up capital and effectively manage travel expenses, can help you get increased visibility of expenditure, using data to inform expenses policies and negotiate with key suppliers That way cash flow can become a far simpler task to manage.