5 ways to manage company cash flow as your business expands

Cash flow management doesn't have to be complicated as you grow or digitally transform. Yet, according to accounting software company, Xero, 28% of small business owners in the UK’s say managing cash flow is challenging. Technology has simplified how we manage both personal and business finance in so many ways. The key is knowing which ways you should prioritize in your business and which will help you achieve the best results.

For some great tips from expert CFOs on this and other topics, please check out our ebook on closing the year. Otherwise, here are our top five ways to manage cash flow better as we head into the new year:

• Get real-time visibility over spend

Make sure you use integrated cards and software in order to make any business payments. If your employees pay with cash and collect receipts to be totaled at month-end, you have no idea what's been spent in the past 30 days. The same goes for personal cards. If your employees pay by personal card, you can't know how much they've spent until they submit their expenses. And, you don't know when they'll submit their expenses either; it will often be later than you want.

If, however, you use company cards with supporting software, you can see every time someone spends. Whether they're using an individual company card or a team card, you can get real-time access to who is spending what and where. Both, your finance team and your budget owners can see the spend, assess it, and consider the next steps if issues arise with over or underspending.

Debunking the stereotypes in the payments industry

Fintech has been a hot topic in the past few years, with more and more new players sprouting up all over the world. Still, not everyone available on the market offers a meaningful solution, and Johnson has seen a lot of red flags when it comes to digital banking providers.

“People look at the success that organizations have had in the fintech space, and maybe they think it’s too easy. They see some of the things that could be improved and think it’s enough to start a business and launch a successful card broker,” highlights Johnson.

As in any other industry, providers have to deliver meaningful value to consumers, or corporations, for the product to be successful. Yet, substantial differentiation from already established providers rarely occurs, and new players in digital banking can get tangled up in trying to release more and more features instead, which seldom benefits customers. “You’ve got to find that intrinsic value that your product and company delivers, and you’ve got to stay focused on your strategy around it.”

Traditional banks: A role in transition?

In recent years, the role of banks has seen a lot of gradual changes. And while many fintechs start up with such a premise, Marqeta’s managing director believes that traditional banks will remain the go-to safe option for many banking needs, despite the spur of innovation in the sphere.

“The question for the banks is, how much do they want to own the customer relationship at the front end? Do they want to be the organization that provides the technology and the services that we interact with every day versus retreating into the background and being the organization that manages the behind-the-scenes of the payments industry like transactions, money lending, etc.,” Johnson said.

Contrary to popular belief, banks are not massively lagging behind resourceful and creative digital banking solutions. Instead, it just takes banks more time to innovate efficiently, whether the innovation comes from partnering with fintechs or rethinking its processes and services.

Are financial managers changing their focus?

The whole financial services industry is going through a revolution which means that many traditional functions are now different. The emergence of various SaaS tools that aim to optimize internal processes and boost productivity within organizations is something we also discussed with Robert Hadfield, financial manager at Dendra. Hadfield remarked that the capabilities of these new tools meant a fundamental shift in the duties and expectations of a finance team, and Johnson agreed.

“There’s no one size fits all solution on the market. Instead, financial managers are responsible for selecting the right tool that accurately seizes the company goals and team dynamic,” Johnson explained. “Payhawk is the classic example — finance managers don’t have to settle for poor solutions and try to do all additional work to make them fit together manually. Instead, they can choose a supplier that takes care of crucial processes for them and successfully eliminates their pain points.”

Trust is essential in financial services

“The challenge has always been to convince companies that what you’re saying about your technology is true,” starts Johnson when prompted about the importance of open APIs and the trust factor between providers and customers in the finance industry.

In this era of innovation - especially in the payments industry - you don’t need organizations to take a leap of faith with you as it was before. Now, you can essentially let them test out your product without a signed contract, even without commercial conversations. Does the solution respond to the company’s ideas, does it need tweaking? You can address all these questions before committing to a tool that could eventually turn out to be harmful rather than help you accelerate growth. And, this exploration translates into having both sides confident in the service offered and sets the tone for a solid partnership.

Regardless of what changes the future of the payments industry holds, whether banks will become obsolete or the CFO role changes even more drastically, one thing is sure: digitalization is here to stay. And, digitalization will continue irrevocably changing the way financial services operate.

Discover how to keep up with the new trends and what SaaS tools best fit your organization to gain control over business spending and accelerate overall growth.