Integrated ecommerce explained
What does the phrase "integrated ecommerce" actually mean in practice?...
When more money is flowing out of a business’s coffers than in, the cash flow shortage can mean there is not enough money to cover business expenses. Businesses in sectors such as hospitality, tourism and entertainment may be hit particularly hard during COVID-19, whilst other company sectors, such as wholesale and retail, logistics, and metals and fuel, will find themselves at high risk due to severe market fluctuations and swerves in demand.
In the advent of an unexpected turning point, even the most carefully managed finances can fall into problems. Here are some tips for managing your cash flow in a crisis:
It sounds like a given, but really get to know your payables and receivables as well as you know your inventory. Whether managed internally or externally, you should insist upon regularly updated financial statements which clearly outline your income and expenditure. Monitoring these with clarity should enable more accurate and current cash flow projections, allowing you to develop a management approach that works holistically throughout your business and to address potential issues decisively.
Invoice quickly to circumvent any preventable further delays and identify any overdue or outstanding invoices in your business’s paperwork. Ordinarily, providing reasonable due dates and establishing late fees is all you need to prompt payments, but as purse strings have had to be tightened for so many currently, you may need to be more understanding in your chasing. Offering discounts for customers who pay sooner than planned, or asking for upfront partial payments or deposits can help to satisfy the cash flow of both parties. Making it easy for clients to pay with mobile and internet payment options can help to overcome any issues caused by social distancing restrictions. Whichever ways work best for your business, increasing your collections activity can make all the difference to the health of your cash book.
While you want to avoid any drastic measures that could concern your employees, business partners or customers, in difficult times cuts could be required to stay in the green as much as possible. Examine your business’s outgoings and profit and loss margins in categories to determine which parts of your company provide the most and least of each. This will help you to identify any wasteful practices that can be limited and to make the most of the areas that are making you real profit.
Negotiating more workable terms on your payables could additionally help to spread out the big costs, and enable you to extend your payables as long as possible, but consider the interest rates and caveats to such extensions. The UK government is offering furlough opportunities for staff, which could help your business to reduce expenses whilst also protecting staff wages up to 80% and preventing the need for any layoffs.
Ensuring your sales are enough to cover your business costs whilst also keeping your expenditure in check is a key component to healthy cash flow. Find every possible avenue to boost your sales and consider which would work best for your setup. Making the most of your marketing channels can help to spread the word of your business, but be sure you have a system in place to convert any leads into real sales. Applying a little ingenuity can make spreading the word work with the times. You can’t exactly hand out flyers in the street, but internet ads, social media ‘industry help’ content and low-cost goodwill gestures can help your business be considered recognisable, reliable and a ‘go-to’ vendor for your market.
In an ideal situation, you should borrow when you are in a financially sound position, as any loans are likely to be approved at a better rate. However, in times of need, options should be explored to put your business in a stable position. There may be options available to your business through government schemes, or other banking alternatives. As long as you have a feasible repayment plan, generating a new form of cash influx can help to see your business through a crisis and enable you to move forward into managing regrowth after the nation’s social and trade restrictions are lifted.
Working as a rainy day fund, putting aside a cash reserve will help to cover any vital business expenses in case of unexpected events or downturns. This will perform as a protection buffer, safekeeping anything from paying salaries to your supply chain costs in the event of a crisis. Prepare a contingency plan to use alongside your reserve that allows you to gain an understanding of your essential operations and understand your financial risk areas.
You’ve heard it time and time again, but technology really can help. Visibility is key, and seeing all your incomings and outgoings together in one place is a game-changer for managing your business. Using systems that connect your departments together, from marketing to accounts, can allow you to see your variables, transactions and sales in a fast, accurate and easily digestible way. The right systems can help you to plot historical data and see averages and trends across your business operations without the long-winded paperwork. The trick is to allow yourself time to plan rather than react, making room for not only cash flow management, but also business growth.
For more information as to which technology solutions would fit your business operations, speak to one of the OrderWise team on 01522 704083 or email at email@example.com
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