Sure your customers are paying, but are your receivables coming in faster than your payables? If you aren’t able to closely track accounts receivable or payables in real-time, then it may be time for a new business management solution.
Like any other business, you gladly accept cash payments and likely also offer terms for your best customers. Both cash and accounts receivable generate revenues; however, often you can only pay your own bills or expand business operations with cash. As discussed in “Why Managing Accounts Receivable Could Save Your Business,” posted by Brian Hamilton on Entrepreneur.com, knowing the difference between profitability and cash flow could make or break your business.
Running a business without considering how much credit you extend to customers can lead to negative cash flow which can hamper business growth. In order to keep a close eye on your finances, you need the real-time insight of an enterprise resource planning (ERP) solution. You can manage all of your business operations from this single, integrated solution including supply chain and inventory, manufacturing and distribution operations, human resources and payroll, and other core business processes. In addition, ERP can provide greater control and insight into your financial processes, which is needed to monitor profitability and protect against overextending credit, especially to late paying customers.
A robust ERP solution, such as Epicor® ERP, offers an easy way to enter, access, and analyze the key metrics pertaining to your financial health as well as other business operations. You can watch for trends in sales figures, accounts payables and receivables balances, and days outstanding. Keeping accounts payable days shorter than accounts receivable days, as Hamilton suggests, can prevent your business from turning into a bank, which can also hamper growth.
You know your customers are paying but do you know whether you are getting paid on time or quickly enough to result in positive cash flow? If you aren’t sure, you may want to schedule a meeting with an accounting professional as well as implement a stronger business management solution. Contact RAM Software Systems for more information about implementing the ERP solution that can provide the control and visibility that you need to run a profitable and successful business.
By RAM Software Systems, Epicor ERP partner out of Texas