Five ways digital tools can help boost cashflow

Managing cashflow cycles effectively and efficiently is essential for the success of any small-to-medium enterprise (SME). If you can forecast expenses and manage incoming payments, you can prepare for slower months. Most importantly, being on top of how to access funding when you need it can mean the difference between taking advantage of opportunities to grow a business or invest in new infrastructure — or not.

Fortunately, the days of clunky spreadsheets and manual ledger entries used to manage cashflow are long gone. The explosion of technology options currently available means businesses are now lining up to take advantage of the new tools, cutting their administrative tasks in the process and enjoying increased productivity and cost savings. 

It wasn’t always the case for many SMEs, which make up a range of businesses who employ 1-199 staff, and make up 99.8% of all Australian business, according to the Australian Bureau of Statistics (ABS).

A report into SMEs’ use of digital tools in 2018 showed that many SMEs struggled to see the benefits of digital technology. Only 40% used cloud services and less than half had a digital presence, such as a website. The global pandemic quickly changed that and by 2020, 90% had started using digital tools to run their business, according to Australian government research.

These digital tools include tools that take the stress out of late payments through automatic invoice reminders to ways to help expenses, receivables, and inventory, as well as providing convenient banking options and quick access to credit when needed.

We look at five different ways SMEs can use technology to improve their cashflow and help grow their business.

1. Instant access to financing

Choosing the right credit card or charge card for your business can give you access to tools that can help streamline spending and cashflow cycles. They can also help cover immediate or ad hoc expenses by providing quick access funds. 

Some options from American Express, for example, include the American Express Platinum Business Card, which has no pre-set spending limit. As a spending and payment history is established, the amount able to be charged on the card could potentially grow with your spend, giving business owners more flexibility and capacity to fit both their current and future cashflow needs. The Platinum Business Card can also create a bit of financial breathing room, allowing up to 55 days to pay for purchases.

As an added bonus, you’ll also earn Membership Rewards points for your business’s spending (at a rate of up to 2.25 points per $1 spent), which you can redeem on a wide range of gift cards and travel related experiences (including flights and accommodation), with the additional option of offsetting your statement costs, using the points you’ve accumulated through using the Card.

2. Cashflow software

There is a raft of accounting software platforms now available, such as MYOB, which integrates with an Amex business card and helps. SMEs see what’s owing and what’s due at all times. Like other platforms, such as QuickBooks and Xero, it also generates invoices and tracks them through the process — sending out reminders when they are overdue and freeing up time for other activities to grow a business. 

Another advantage is the variety on offer — some are designed for little more than simple bookkeeping and others can manage the entire financial operations of large businesses. The bottom line is they reduce costly bookkeeping mistakes and free up resources in the finance team to focus on more complicated business tasks.

3. Mobile banking

Most financial institutions now offer mobile banking ​​apps designed to be used on the phone. They make cashflow management easier, more accurate and are highly convenient. You can make payments, accept payments, transfer funds, deposit mobile checks, monitor your accounts without ever having to go to the bank — or use a computer.

The Amex App, for example, allows users to quickly and easily view the last 6 months of statements and sort by credit or debit transactions. It also provides an option to pay the account and receive handy reminders when payments are due. It also lets business owners see transactions used through Employee Cards, giving them better oversight and control of all business expenses.

4. Electronic payments

Businesses may struggle unless customers can pay quickly and efficiently.

Mobile technology such as Square and Lightspeed are now easily available and turn a smartphone or tablet into a point of sale machine — removing the need for complicated transaction systems for small businesses. They are simple to set up and perfect for smaller operations.

Similarly, when suppliers don’t accept cards, services such as AccessLine™mean enrolled American Express Business and Corporate Card Members can make fast, secure payments to suppliers within Australia and overseas. It’s a similar service to other payment portals like B2BPay, RewardPay and Frequent Pay.

5. Inventory management and control

There is no longer a need to manually count inventory every couple of weeks and compare it against sales to manage cashflow. Keeping track of stock is a breeze with inventory management software. It not only helps automate and streamline processes by tracking levels, orders, sales, and shipments, it also crucially prevents potential human errors in the business. 

Overall, tapping into the power of digital tools can help SMEs better manage their cashflow by helping with a range of functions, from basic administrative tasks to better forecasting expenses and revenue. Best of all, they help remove the potential for costly mistakes and keep the cashflowing smoothly.