A B2B company with strong cash flow can accomplish almost anything. Whether you’re hiring new staff, purchasing the best technology on the market, or opening a new location, it’s all possible with the right amount of capital. That’s why it’s critical to improve cash flow, especially if a lack of it prevents your company from reaching the next level.
Cash flow is the movement of money in and out of your company. The goal is to achieve positive cash flow, when you’re bringing in more cash than sending out. Unlike profit, which measures a company’s success, cash flow gauges its overall financial health. A profitable company may have a hard time meeting operating expenses if its cash flow is weak or improperly managed.
Here are five reasons improving cash flow should be on every B2B company’s to-do list, and how accounting automation, especially when it comes to automating your AR (accounts receivable), makes it happen.
1. Strengthens your relationship with customers
Retaining customers is far less expensive than hunting for new ones, according to Think Impact. Establishing loyalty, however, goes beyond providing quality goods and services. Your buyers want to be treated well, which is why Zendesk reports 60% chose one seller over another based solely on the level of service they expect to receive.
Strong cash flow prevents shipping delays and product shortages and establishes trust with your customers. It also enables you to add talent or invest in training programs that enrich your level of service. When your company’s cash flow is strong, you can be flexible with customers who are struggling to cover expenses. You’re not living payment to payment and can afford to extend due dates or alter credit terms. They’ll remember your generosity and will certainly buy from you again. They may also bring in more business by telling their friends and colleagues
2. Strengthens your relationship with vendors
As a business owner, you appreciate prompt customers who save you the stress and time associated with chasing down delinquent payments. Your vendors feel the same way.
Hitting payment deadlines is easy if you have the cash to do so. Vendors will show their appreciation by getting your orders out faster and offering discounts. Or they’ll provide access to exclusive deals and offer to extend payment terms. They’ll also make you a priority whenever materials are in short supply, ensuring you get what you need when you need it.
3. Gives you a competitive edge
Modernizing equipment, adding staff, and expanding operations keeps you ahead of the competition. But none of it is cheap, and a slow, inconsistent cash flow keeps you toward the back of the pack and encourages customers to look elsewhere.
Strong cash flow empowers you to reinvest whenever the opportunity arises or put aside capital for when it’s the right time, enabling your company to proactively set the industry standard instead of simply reacting to the competition. When customers are searching for the latest, most cutting-edge products and services, they’ll know to turn to you.
4. Reduces reliance on credit
Companies with weak cash flow may seek external financing through loans and lines of credit. These funds may bring temporary relief, but they need to be paid back and can be compounded with interest rates and fees.
Having a strong cash flow helps you remain financially independent, pay expenses, and make other purchases. You don’t have to worry about deadlines and interest, or your company’s credit score taking a hit because you don’t have the cash on hand to make minimum payments.
5. Makes for a low-stress environment
Whether it’s a natural disaster, economic downturn, or a supply-chain delay, things happen that you and your team can’t control. Having a weak cash flow makes it harder to recover and may have you on edge.
A strong cash flow enables you to save for such occurrences, giving you peace of mind in knowing you’re prepared for the worst. And if you do need a loan, maintaining steady cash flow creates a good credit score that’s attractive to lenders, leading to better terms and more affordable interest rates that are far less expensive than those tied to emergency loans.
Improve cash flow with Bill360
Accounting automation built for B2B companies like yours, Bill360 accelerates cash flow by automating manual, time-consuming AR tasks like invoicing and payment reconciliation. Bill360 enables your customers to set up and manage their own digital wallets, making their payment process as simple as just clicking a button. And the faster you get paid, the more cash you have to hire staff, modernize equipment, or amplify marketing efforts.
Give your cash flow a boost and contact Bill360 today.
