Manage Your Cash Flow to Achieve Strategic and Operational Excellence

For a company of any size, cash is the lifeblood of the business and the key to survival and growth. This is particularly true of small businesses in an uncertain economic environment. The everyday questions you have about your business become even more important.

  • Are your customers paying on time? Which customers should be rewarded for their loyalty and discipline in making payments?
  • Are your vendors and suppliers tightening their credit terms? With which vendors should you consider negotiating better terms?
  • Do you have just enough inventory on hand – or too much?
  • Do you have cash on hand to meet payroll next week, next month, next quarter?

If you can’t answer these questions and others related to cash flow, your business is at risk. Poor financial management obviously has a direct impact on the availability of cash and the ability to make accurate decisions about operations and long-term strategy.

The SAP Business One application helps businesses streamline their financial operations and integrate them with other business processes in real time, resulting in faster transactions, more accurate data, and the ability to use business intelligence and reporting to support strategic decisions.

SAP Business One automates financial management in these four key areas:

  • Financial accounting: Handles all your financial transactions – including general ledger, journal entries, budgeting, and account setup and maintenance – in one system, with comprehensive tools and reports
  • Budgeting: Manages budget creation, allocation, and distribution; provides budget tracking, reporting, and alerts that notify the responsible users whenever a transaction exceeds a monthly or annual budget limit
  • Banking: Tracks all banking processes, such as cash receipts, check writing, deposits, advance payments, credit card payments, and account reconciliation
  • Financial reporting: Provides easy-to-use financial reports, including balance sheets, profit and loss statements, cash flow analyses, transaction reports, multiperiod comparisons, and budget reports

Integrated systems and processes improve cash flow
Many small businesses have point systems for managing the various aspects of their operations – including accounting systems. It’s easy to quickly outgrow these systems because they aren’t integrated with other business systems. Consider, for example, the order-to-cash process, including order entry, fulfillment, invoicing, customer payments, and collections. The order-to-cash process – all the steps that transform products or services into money in the bank – involves many steps.

A measure of how quickly those steps are executed is referred to in accounting terms as days sales outstanding (DSO), essentially the number of days on average that customers take to pay invoices. A low number can indicate many things – that customers are paying quickly, that customers are happy, that collections are successful. High numbers can mean the opposite or that credit is being extended to customers not worthy of it. When you use point systems for different elements of the order-to-cash process, you can create delays and data errors that result in an inaccurate DSO number and that ultimately lead to poor cash flow management and accounts receivable operations.

The operational challenge of managing cash flow is compounded because other systems are involved, such as manufacturing/production, inventory, marketing, warranty and service management, and so on. With SAP Business One, you have a single, comprehensive, integrated solution to manage your entire business across financials, sales, customer relationships, distribution, e-commerce, and operations, without the need for separate installations and for complex integration of multiple modules.

Having these systems in a single, preintegrated solution helps you manage your money better by:

  • Saving time on processing transactions and related operational activities
  • Reducing errors that create operational problems
  • Providing real-time business intelligence and analysis, based on a single version of the truth

Here are just a few examples of how SAP Business One can better manage the transactions that impact cash flow:

  • Workflow-based alerts
    The longer you wait to take action, the less likely you are to collect your outstanding payments (as they apply to DSO). The workflow-based alerts in SAP Business One can notify you of any pending payments that may affect the cash flow conditions of your business. The alerts allow you to quickly focus on those customers that require collection.
  • Aging reports
    SAP Business One gives you an analysis of outstanding receivables and liabilities for both your customers and your vendors, as well as how old the receivables and liabilities are, allowing you to effectively support the cash flow needs of your business.
  • Dunning systems
    SAP Business One helps track customers that have not paid off their invoices and generates automatic reminder letters, depending on the extent of the delay in payment and the past due amount.
  • Forms of payment
    Customers today demand payment flexibility that includes check processing, credit card processing, cash, and electronic transfers. How you manage these transactions can affect the amount of interest or bank fees you pay, as well as the credit availability for both you and your payee. SAP Business One not only allows you to accept and process payments in any form – and in multiple currencies – but also allows you to set and manage terms profitably.
  • Taxes
    Every financial transaction that occurs within your business has a tax implication. As your business expands across geographies and tax jurisdictions, you must meet their requirements or face fines and penalties. Additionally, you have to plan to have enough cash on hand to make quarterly and yearly tax payments. SAP Business One automates tax compliance processes so that you don’t miss payments, don’t overpay, and don’t underpay your fiscal obligations.
  • Payment reconciliation
    Good financial management includes working closely with your bank or financial institution to ensure timely payments and correct reconciliation against your cash balance. Within a few clicks, SAP Business One can show you which payments have been made and which are still outstanding for open invoices. You can avoid overdrafts, which cost you money, and you can better move funds among accounts.

SAP Business One was built for small but growing businesses. It’s easy to use and quick to implement (average time, six to eight weeks), so you can get it up and running faster, minimizing the need for IT involvement. An intuitive interface allows your accounting staff to more rapidly leverage functionality with minimal training. SAP Business One is available in 20 languages and in 40 different, country-specific versions that are legally compliant and incorporate business best practices for those geographies.

Managing cash flow is an operational function that affects your strategic direction. In these uncertain times, managing your money well requires a timely, clear, and accurate picture of your financials. With SAP Business One, you gain the insight needed to help run your company more profitably.

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