A healthy cash flow is essential for any business’s success. Cash flow problems can quickly lead to financial instability or even bankruptcy. How can you improve your company’s cash flow from accounts receivables? ERP accounting software and finance modules can help streamline your A/R process which will increase cash flow metrics.
What is an Enterprise Resource Planning System?
An ERP system integrates all business processes into one software application. ERP accounting software modules allow businesses to better manage cash flow and accounts receivable. This module will help you to improve your invoicing process, track customer payments and identify late payments.
How ERP Automation Can Help Improve Cash Flow?
ERP automation can increase your cash flow in many ways. When choosing software, prioritize the ones you care about most.
Automated Work Procedures
Your staff can manage their workloads more efficiently with automated work processes. Automated work processes can be a time-sucking and tedious addition to their job duties so that they can focus on more rewarding and challenging tasks that require human intelligence.
Customer Service
A well-organized accounts receivables process will provide better customer service. Customers will be happy if they get prompt and accurate answers to their inquiries. This will help them maintain good relationships and keep them satisfied. Customers will love the invoice management feature that is independent.
Faster Invoice Process
You can quickly create invoices with accurate and current information from the ERP accounting software. This allows you to create invoices faster and improves your receivable turnaround.
Real-Time Data Analytics
ERP accounting software can produce reports that are updated in real-time. This information can be used by managers to make timely decisions. It can also be used as a tool to increase transparency. The AR team can track the company’s performance.
Reduction of Errors
Automated ERP accounting software systems can reduce errors in the accounts receivable process. This can result in fewer invoice disputes and quicker payments. This reduces the chance of missed opportunities and cash flow deficits.
Track Customer Bills
You will immediately be notified when a customer pays. Additionally, you can track the payments over time to see trends. This information will allow you to make informed decisions about pricing, discounts, and credit terms.
What are some important cash flow metrics?
Accounting KPIs are plentiful. Too many KPIs can be overwhelming. These top picks will help you narrow your choices.
Accounts Receivable to the Sales Ratio
This measure identifies the percent of sales that are accounts payable. The lower the number is, the better. This indicates that less of the sales are held up in accounts receivables, which frees up more cash for the company.
Cash Conversion Period
This is the time it takes for a company to convert cash into cash. Cash conversion cycles include the time it takes for products to be sold, the time it takes for receivables to be collected, and the time it takes suppliers to pay suppliers. The shorter the cycle is, the better.
Days Outstanding
DSO is the average time it takes to collect payment on accounts receivable. Your AR team’s collection performance will be better if it takes less time. This also means that there is less chance of cash flow problems.
Inventory Turnover Rate
This is a measure of how often inventory has been sold and repurchased by a company over a given period. A company’s liquidity position will improve if this number is higher. This also indicates that the company generates more cash from its inventory.
What can you do to get the most out of an ERP system?
To maximize your ERP system’s potential for cash flow automation, optimize it. Here are some tips:
- You can customize the ERP system to meet your needs. Ask for assistance from an ERP consultant or the software vendor.
- You can review your receivables process to identify areas that could be improved. This should be done at least once a quarter.
- Your staff should be trained on how to use the ERP system’s accounting software module. To fully take advantage of its capabilities, they should be familiarized with its features.
- To better understand your receivables data, use the dashboards and reports available in the ERP system.
Why is Cash Flow Management Critical To Business Success?
Cash flow is essential for businesses to pay their bills, invest, and cover any other expenses. Companies that have the low cash flow or no cash flow will struggle to survive.
Businesses must be able to understand their cash flow and make improvements. ERP Accounting software systems automate accounts receivable processing and provide real-time data analysis. These and other tools can help businesses improve cash flow and increase their success.
Why should you choose Arion ERP’s Accounting Software & Finance module?
Our software has been perfected over many years to ensure that it provides the best solutions for our clients. Arion ERP’s Accounting software has seen a significant improvement in DSO scores and cash flow. These companies have higher employee satisfaction because they eliminate monotonous tasks.