Cash flow hacks to keep business steady

By Ryan Falkenberg, 27 April 2023 – Originally published by Channelwise.

South Africa’s economy is taking a downward turn, with real GDP growth projected to decelerate sharply to 0.1% amid a global slowdown in business. Local entrepreneurs are keeping an eye on many metrics, cash flow key among them.

The three most dreaded words in the English language are ‘negative cash flow’, said Hong Kong businessman and author David Tang, but how can businesses maintain positive cash flow in a dwindling economy?

Hardwire positive cashflow into your business processes

It all starts with how you set up your business, says insurtech platform Root COO Charlotte Koep. “Being smart about internal tools, systems and technology leads to lasting productivity gains, giving you the ability to focus precious human skills on the most impactful work” she says.

Koep believes many of the basic principles that underlie good insurtech platforms hold true for online businesses.

“Low-code software services and cloud-native architecture for flexibility, open API documentation and self-help tooling for control, access to an ecosystem of third party services, seamless integration into developer processes and practices for more control, flexibility and ultimately speed – these are all things modern businesses have to keep in mind as they develop. These basics underpin how new businesses or products contribute towards positive cashflow,” she says.

Improve customer experience with automation

The next step is to focus on the day-to-day mechanics of your business, and optimise those, says CLEVVA CEO Ryan Falkenberg. The company helps to free human customer service agents from robotic work through virtual agents.

“Lead qualification, renewals and upgrades, collections, query resolution, dispute handling, and data gathering through digital channels form the practical basis of a cash flow strategy for many companies. So it’s worthwhile automating those basic customer interactions to leave your human agents free to resolve issues only humans can resolve,” he says.

According to a survey by Fundbox, 64% of small businesses have unpaid invoices that are over 60 days past due, which can significantly impact their cash flow.

“This highlights the importance of managing accounts receivable and ensuring timely payment from customers – and it can be automated to allow people to focus on getting in new business,” Falkenberg says.

Accept short-term credit without taking on the risk

What to do if your customers really need payment terms but your business simply can’t offer them in South Africa’s financial services environment? A variety of Buy Now Pay Later and alternative credit options are available to businesses, says payment platform Peach Payments’ Head of SME Growth & Marketing, Joshua Shimkin.

“Some payment options, like Mobicred, Payflex and ZeroPay, give customers almost immediate access to credit. Merchants get paid upfront on purchase, and customers make payments over three or four months, depending on the payment provider,” he says.

Shimkin believes short-term credit options are particularly useful to customers who need to make larger payments – anything from winter school uniforms to a new laptop – but can’t afford the lump sums.

“As a business owner trying to improve your cash flow, you can’t afford to lose out on a single sale. These short-term payment options end up being a win-win for everyone involved.”

Whatever strategies businesses employ to keep more money coming in than going out, Koep, Falkenberg and Shimkin agree that technology can help companies maintain a positive cash flow – if deployed timeously and appropriately.

View original article here.