Cash Flow Strategies with Custom Software

Your cash flow strategy does not have to begin and end with a grumpy CFO making demands. When you integrate Sales, Operations, and Finance by managing the automatic flow of information and triggering key events, your business will develop healthy cash flow strategies with custom software. Let’s take a look at the first area: Sales.

Sales Automation: Shrinking the Sales Cycle

Cash flows begin with a sale. Using custom software, you can shrink your sales cycle and start bringing in cash faster as a result. Here are some ways that custom software can help your business reduce that sales cycle:

• Payments: We can better manage cash flows tied to the sales and implementation of a new sale. By collecting deposits and progress payments (especially on longer contracts), and creating recurring invoices based on usage, your business can bring more cash in during the earlier phases of a project. All of this can be initiated by custom software managing the cycle for you.
• Contracts: Sales professionals within any organization know that a “closed deal” is a signed contract. Finance sees a “closed deal” as one that’s gotten that first payment. So, the faster and easier a contract can be executed, the faster cash starts flowing from the new sale. Your software can automate the signature and payment process and make it as simple as possible, removing obstacles and human delays from the sales cycle.
• Marketing and Sales Automation: What about before a contract gets signed? That’s where marketing and sales automation can shine, nurturing new leads and creating great opportunities to keep a prospect active within the sales funnel. This automation will speed up that process, and it can help close more business as a result.
• Change Orders: Any sale that has specifications and deliverables spelled out in a contract has the potential for “scope creep,” where new work gets added without getting documented. Having software that helps your team manage these changes will also help adjust invoices and billing in order to collect proper payment on those changes. This alone can have a significant impact on a business’ cash flows.
• Incentives: Another great way to shorten your sales cycle is through incentives. Using custom software, you can automate, generate, and track incentives such as coupons, discounts, special offers and referrals. These can be especially valuable during slow seasons and when pushing new products.

Business Operations: Creating Efficiencies

Business managers focus on cutting costs and increasing efficiencies. Remember J.D. Rockefeller’s famous reduction of weld points on his kerosene cans from 40 to 39, saving his company $2500 the first year after making that change. Using custom software, your company can keep a keen eye on costs, efficiencies, and make necessary improvements to increase your cash flows. Here are a few ways you can do that:

• Inventory: Finance types often refer to inventory as “frozen cash.” Managing your inventory with custom software can thaw out some of that cash and get it flowing through the business. When you tie together your sales software with your operational software, you can get as close to just-in-time as possible. As an example, consider ecommerce. There's often options available for larger inventory management platforms, but a lot of times these have to be customized to work with proprietary APIs. In other cases, there's no API, but a client wants an easy way to manage inventory levels. In one case, we created a software process that pulls the inventory levels down from a Google Sheet and updates the ecommerce site automatically.
• Equipment: Capital equipment doesn’t stay new for long. Tracking outages, maintenance, depreciation, and salvage value though your software will help you maximize cash associated with that equipment. You’ll know when to sell or retire equipment that is aging out, reduce work stoppages, and maximize salvage value. All of those tie right into your cash flows and cash balances.
• Workflow Management. Finding efficiencies (or inefficiencies) in your operational workflow is always the focus of management and a great opportunity with custom software. As an example, we are implementing a more robust management tool for a client that will automate certain parts of their application (auto-update tasks, trigger events, which can take care of downstream actions that need to happen). With our custom workflow management package, they can define steps, what happens at those steps, and trigger the actions that need to happen at those steps to move work through the process faster and with fewer errors.

Finances: Shorten the Cash Flow

The finance team is the one directly managing cash and writing “checks.” When you give them the right tools with custom software, you open up possibilities throughout all the functional areas of the business. Here are a couple of examples:

• Collections: At the heart of your cash flows is the inflow of cash. There’s no better way to improve your cash position than to collect on receivables faster. Using custom software, you can automatically trigger invoices, offer fast-pay incentives, and tack fees on to slow pays. You can also make it easier and more convenient for customers to pay your invoices. Consider subscription payments. We recently implemented changes using Stripe's subscriptions. The result was that we actually sped up getting a new feature out and started gaining that new revenue stream. Using Stripe's Webhook system, we were also able to handle usage-based subscriptions. That makes customer payments more current, as related to services and goods sold, rather than waiting an extra month for payment.
• Budgeting: Budgeting applies to operational expenses and to project costs. Your software will help you align revenues with expenses and cost of goods in order to maximize cash flows and resulting cash on hand.
• Reports/Intelligence/Analysis: Custom software means custom reports, the reports your team needs to make strategic decisions on everything from purchasing supplies to paying employees to inventory to managing debt. For example, just like we mentioned above, we often utilize Stripe's Webhook system to manage the subscription lifecycle.

Custom Software: Tying it All Together with Integration

At this point, you realize that healthy cash flows depend on information flowing through the business, from Sales to Operations to Finance. That’s why using custom-designed software is such an important tool for your overall cash flows. Custom software integrates each functional area of your business and automates the sharing of that key data. That allows your business to trigger those key events that result in timely action throughout the organization.

If you have questions about how custom software can help you manage and maximize your cash flow, contact us today to schedule a review of your software needs.