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    How to improve your business’s cashflow: top tips for automating your accounting

    Maintaining control of cash is vital for business success. Automating the accounts process improves accuracy, increases visibility and frees up time for more profitable work

    Male employee and female owner working while using digital tablet in clothing store
    Automating the invoice process is a way of future-proofing your spend management. Photograph: Maskot/Getty Images
    Automating the invoice process is a way of future-proofing your spend management. Photograph: Maskot/Getty Images
    Mark Hillsdon

    Last modified on Wed 6 Oct 2021 12.05 BST

    Keeping track of company spending is crucial but also a huge challenge, with more than 80% of failed small businesses conceding that they collapsed because of cashflow problems.

    There are, of course, tried-and-tested ways to improve cashflow, such as renegotiating deals on rent, utilities and insurance. Invoicing promptly can also speed up cash coming in, while not paying invoices too quickly means money stays in your account longer.

    But you can’t control what you can’t see, so it’s important to put tools in place that give clarity on how the business is spending money. These can generate data that can help you make better, more strategic business decisions. Increasingly, digital transformation and new tools, such as those offered by SAP Concur solutions, are a key part of the process.

    Automating accounts payable (AP)
    Automation can bring huge benefits to SMEs and increase the efficiency of virtually any task or process. It involves moving away from outdated paper-based processes and cumbersome spreadsheets, with solutions sitting in the cloud instead.

    Automation adds consistency and cuts out inevitable human errors too, as finance teams no longer have to work on tedious, time-consuming tasks such as manually entering data. This frees them up to spend time on higher value-generating work instead, putting their skills to much better use and bringing them greater job satisfaction.

    Invoice capture
    While you may pay close attention to incoming cash to ensure you’re getting paid, it is equally important to monitor outgoing cash, too.

    Ideally, you should have a clear picture of all your upcoming liabilities, so you can manage your cashflow accordingly. Without this kind of visibility, it’s inevitable that you will waste time firefighting.

    Automating the invoice process is a way of future-proofing your spend management. You can see exactly where an invoice is in the process, while automated reminders prompt people when they’re required to act, or flag up possible compliance issues. It speeds things up too, by allowing managers to approve invoices on-the-go from a mobile phone.

    The risks of not automating
    Not automating, and continuing to run an AP system that is past its prime, is a path that’s fraught with risks, such as paying duplicate invoices and making late payments.

    More often than not, late payments are down to a slow AP system rather than any deliberate act. The approval process, for instance, is often very slow, taking on average 10 days to get through the system. Paper invoices also get lost, or they arrive with AP teams far too late, often when they are already overdue.

    Shot of a young woman using a digital tablet while working in a waste free store
    Having quick, easy access to cashflow data improves business agility. Photograph: Hiraman/Getty Images

    This can lead to bad relations with suppliers but following the recent tightening up of the prompt payment code, it can leave companies open to fines, too.

    Among several changes, business managers now have to sign the code personally, ensuring that responsibility for payment practices is taken at the highest level of an organisation.

    It commits a company to paying 95% of invoices within a set period, and the government is considering strengthening the powers of the small business commissioner to ensure larger companies pay smaller suppliers in time, with the threat of fines if they don’t.

    Use data for business insight
    Every digitised process within your company can now offer you insights into the way the business is performing, and automating your accounts is no different. Compiling and collating huge amounts of financial data allows you to shine a light on every area of the business.

    By creating a single, reliable source of spend data, which is close to real-time, you can maximise cashflow, redirect money where it needs to go and gain a much clearer idea of how spend is affecting your bottom line.

    Having quick, easy access to this kind of data improves business agility, too. By knowing exactly where your business’s money is being spent, you are in a much stronger position to follow up potential business opportunities, or cope with unexpected changes.

    It also gives you the option to mine historical data, which can be an important asset when future planning and forecasting.

    Automation is also helping businesses adapt to home working. With workforces now more remote, and spending often lacking the direct oversight of a manager, businesses need to take advantage of every opportunity to gain control and insight over spend.

    Automation can help achieve this, and the more that finance and IT work together, the more intelligent the processes that drive an organisation.

    SAP Concur solutions help automate finance processes to free up time for staff, provide insights into spending and future-proof your business