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Encouraging Business Growth: The Power of Cloud Accounting for Cash Flow Management

By Team bluQube

In the face of a challenging UK economy, businesses must discover new avenues for growth to thrive rather than just survive.


Effective cash flow management emerges as a crucial factor in driving business growth. Unfortunately, poor cash flow management is a common struggle for many firms, resulting in negative cash flow and financial strain. To overcome this obstacle and stimulate growth, businesses need to adopt a strategic approach, leveraging the power of cloud-based accounting software.


The Problem: Poor Cash Flow Management

Maintaining positive control over cash flow is vital for businesses to reinvest, settle with suppliers, meet payroll, pay expenses, and provide returns to investors. However, inadequate cash flow management plagues numerous companies, leading to an estimated aggregate cash flow deficit of £140 billion in the UK, where expenses surpass incoming funds. Negative cash flow severely damages a business, leaving it unable to meet obligations, at risk of overdrafts, and burdened with interest on loans.


Taking a Strategic Approach

To generate efficient cash flow and foster growth, businesses must strategically implement cloud-based accounting software. These software packages offer invaluable benefits such as flexible reporting, enhanced cash flow visibility, automated debt recovery, and automated payments. In today's challenging economic climate, can businesses afford not to improve their financial processes?


Key Features of Cloud Accounting Software

Automated invoicing and debt management are two crucial features offered by accounting software packages. These systems seamlessly integrate with a company's bank account, generating sales invoices that are automatically emailed to customers. Moreover, automated debt management notifications systematically remind customers via email about upcoming payment deadlines. This simplifies and automates credit control by sending automated prompts at preset intervals, ensuring swift and efficient payments into the business coffers, as online payments are the quickest and most convenient method.


Furthermore, software systems can set up direct debits for customers and generate BACS files for streamlined payment processing. The business receives a 'cash receipt' notification upon payment arrival. Bank reconciliation processes can also be automated as the software reads the bank statement file, cross-matching it with the system.


When it comes to purchasing ledger capabilities, businesses can receive purchase invoices from suppliers via email. The software utilizes optical character recognition (OCR) to read the invoice and create a purchase invoice within the system. Payment runs can then be established, regularly updated, and hold invoices to produce an acceptable total value for each run.


Finally, BACS files are sent back to the bank to initiate payments, and remittances are generated and sent to suppliers via email for payment notification. In the past, these processes were manual, resulting in increased bad debt, late payment penalties, and interest charges.


Final Thoughts

Implementing a cloud accounting software package simplifies, accelerates, and streamlines cash flow management, providing business owners with a cost-effective tool that allows them to strengthen and increase profitability despite challenging economic times. By embracing cloud accounting, businesses gain invaluable time to focus on growth while ensuring efficient financial processes.


Want to know more? Read our case study with Wrexham Univeristy.

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