Paul Lodder is a qualified accountant and Product Domain Expert at Dext. In this video guide, Paul talks through how data can help with cashflow and supplier management. Below is the transcript.
Having the right data is absolutely key to help you with your cash flow, supplier management and customer management as well. Data analytics can help you understand the internal policies and current processes that you have in place around the collection of outstanding invoices and the payment of invoices to your suppliers.
With all the uncertainty that businesses have gone through over the past 12 to 18 months – and that uncertainty continuing as well – having good control over your cash flow is absolutely critical. It is important to have up to date, real-time information and visibility of that data so you can make the right decisions at the right time.
The data can help you identify any variable costs that you could potentially reduce that will, in turn, ease your cash flow burden. You could use the data to take more control of your customer invoices, look at your debtor days, see how long your customers are taking, and ensure that you have communication at the right time so that you’re receiving the funds as expected.
Using accurate data means that you have your finger on the pulse, you’ll know exactly how much you owe your suppliers at any point in time, and when those due dates are. You can track your creditor days to see if you’re taking longer to pay. If you are taking longer to pay, you can deep dive into that further to understand why.
Is it because your customers are taking longer for you to pay? Or is activity slowing and you’ve got fixed costs that still need to go out every month which is having an impact on your cash flow? Taking control of your suppliers and your customers by looking at the current processes and systems means that you can address any potential cash flow issues as they arise.
As many people say: “Cash is king”. And it is absolutely crucial for businesses to use the data to track their cash inflows, their cash outflows, manage their supply payments, manage their customers in terms of receipts of funds from invoices raised to ensure the continued success of the business.