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Three Ways Business Process Automation Can Improve Cash Flow

04.08.2020

Cash flow can be understood as cash coming in and going out of a business. Seems simple, but any CEO or CFO can tell you that the reality is much different. Complexity gets introduced when there’s more than one customer or supplier who are paying in different ways and on different terms. Even the more stable elements of cash forecasting, such as capital expenditures (if it’s included in your model), payroll and taxes can change regularly and throw off assumptions. That’s why many businesses rely on indirect cash flow, where liquidity is the change in value on financial reports at the end of the period. 

Direct cash flow forecasting, which includes daily and weekly forecasts given operational data, can be incredibly powerful. Businesses with low cash reserves, those preparing for M&A activity, or focusing on debt repayments can find great value in direct cash flow forecasts. 

Direct cash flow visibility is dependent on consistent and visible base business processes. Business process automation and robotic process automation can greatly improve your forecasting in three ways: 

  1. Sales terms  
    1. Any sale where terms deviate from the business standard should be reviewed, approved, and incorporated into the direct cash flow model. Automating this process ensures fast and controllable review. 
  2. Collections 
    1. Automated invoicing, reminders and follow up tracking can greatly improve receivables on time. 
  3. Payable processing 
    1. Eliminate invoices through technology and 2-way match. 
    2. Use electronic data interchange (EDI) or similar tool if possible. Otherwise, scanning automation can eliminate the need for keying data, and a workflow approval process can provide control and visibility to any invoice before it’s posted.  

Our clients have found success when they started out with a lean process design, then selected the right tool or application to enable it. Contact our business performance consulting team for more information about our approach and the benefits clients typically see. 

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