BUSINESS GUIDE DISTRIBUTED WITH


12TH FEBRUARY 2024


Finance, Legal & Accounting 17


Managing cash flow can keep businesses alive


Tere’s an old saying in business: revenue is vanity, profit is sanity, cash is king


Money in the bank is what keeps every business alive. Te chal- lenge is that if an enterprise doesn’t manage cash flow effectively, it’s likely to suffer from business unpre- dictability, volatility, and conse- quently won’t be able to make good financial decisions for the future. Furthermore, it may risk over- trading and ultimately going out of business. Sadly, too many organisa- tions go under not because they’re poorly managed or have a bad busi- ness model, but simply because of poor liquidity. Managing cash flow is espe-


cially tricky for organisations that are selling services rather than just products. Service invoicing is typi- cally far more complex: part of a bill might be fixed-price, part might be for time and materials, and there may be additional ad hoc expenses or milestone-based payments, etc. Subscription-based


services make it more complicated.


Struggling with disconnected systems Organisations frequently struggle to manage cash flow because they are forced to rely on inefficient and disconnected processes. Tey’ll use one system for managing sales, a


second


delivery, and a third for managing invoices. Tese different


system for managing systems


often include archaic spreadsheets and a wide variety of siloed tools. Tis causes disconnection, which


inevitably leads to errors and delays. When there’s an inconsistency


only


“Organisations frequently struggle to manage cash flow because they are forced to rely on inefficient and disconnected processes”


between what’s been sold and what’s been invoiced, customers won’t pay their bills — they’ll dispute their bills, they’ll hold off payment, and ask for discounts or even write-offs. In summary, if you give customers a reason to not pay their invoices, they won’t, especially in a tight economy. Te answer to managing cash


flow lies in having a platform that seamlessly connects all these sales and billing processes. Tat means a solution that puts all customer transactions in one place and gives employees in sales, finance and operations all the same information and data.


Keep on top of cash flow with Certinia Services organisations need a common source of truth. Rather than having to comb through spreadsheets and fumble through disparate tools to find financial and billing information,


services orgs require a platform, such as Certinia,


pragmatic AI, the company can analyse past payment patterns, client behaviour, economic indi- cators and other relevant data to predict the propensity for any customer to pay a particular invoice. For example, the AI might indicate that if they’ve spoken to a client in the past week, that customer is more likely to pay their bill on time. Or it may highlight that any invoice over £100,000 requires an extra layer of approval, which routinely causes delays. Te use of AI will enable services


organisations to both generate more accurate cash flow forecasts for better business decisions and also to imple- ment improvements in operating procedures and business practices.


that gives them everything they need in one place — a common, shared view across all teams and visible through a single pane of glass. Tis transparency should be


extended to the customer with portals that offer users access to all


the same information — such


as transaction history and invoice details. As a result, customers can resolve their own inquiries, and minimise the likelihood of delayed payments. Leveraging


this information,


organisations achieve a real cash forecast. Tey gain a full picture of both revenue and costs, enabling them to truly understand their margins and to pinpoint cash flow at any given time. With these insights, service orgs can make better near- and long-term decisions and avoid


expenditures that could their business.


threaten


The impact of pragmatic AI AI offers significant potential in solving these problems, but it needs to be pragmatic and target common, current business problems rather than aspirational or flashy use cases. Pragmatic AI gathers, processes and presents data in areas where people are doing work. It closes a loop through a virtuous cycle of capturing, aggregating, reasoning and surfacing data to produce meas- urable outcomes and a tangible return on investment. Consider the following: a services


organisation relies on its clients to pay their bills on time to main- tain steady cash flow and manage its operations. Using Certinia’s


For more information, visit: certinia.com


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