Maintaining a healthy cash flow is one of the most important tasks for finance teams working in commerce today. A strong cash flow helps you avoid unnecessary risks and expenses (such as late fees on accounts payable), which negatively impact your business’s reputation and slow down further growth. If you’re looking for smart, effective ways of preserving your company’s cash flow, read on to learn about common obstacles and what you can do to overcome them.
Managing cash flow is essential for keeping any business running and growing. With a well-managed cash flow, your business is better positioned to meet its financial obligations (accounts payable), invest in growth opportunities, profit from stronger relationships with suppliers and ensure smooth day-to-day operations. It’s important to manage your cash flow effectively, or else your business will suffer from missed payments, damaged supplier relationships and missed opportunities for growth.
Modern commerce businesses often face several cash flow challenges that can impact their operations and growth. Below, we cover the most common cash flow problems and provide some tips on how to avoid them.
Seasonal fluctuations in sales can lead to periods of high revenue followed by slow periods, making it challenging to maintain consistent cash flow throughout the financial year. These fluctuations put a strain on your working capital, which can often lead to difficulties in financial planning and budgeting. That’s why it’s important for finance teams to implement robust cash flow forecasting and management strategies to anticipate and mitigate the impact of these variations.
If your business struggles with cash flow problems during off-peak seasons, consider some of these solutions:
High upfront costs of inventory and advertising can create a cash flow gap that you have to bridge until sales revenue comes in. For finance teams working in commerce, monitoring and managing that gap (also known as the cash conversion cycle, or CCC) is one of your top priorities.
To effectively bridge the gap, focus on optimising each stage of your business’s CCC:
Many commerce businesses improve their liquidity with strategic buying practices such as just-in-time inventory, dynamic discounting and supply chain financing. Securing short-term financing solutions can also help. Some common financing options available to commerce businesses include:
It’s always good news if your business is growing. Yet the more your business expands, the higher its operating expenses and employee costs become, adding even more pressure to your cash flow. Growth often demands higher spending on salaries, employee benefits, infrastructure, logistics, technology and marketing.
To balance your growth investments with cash flow requirements, it is important to ensure your business’s expansion is sustainable. Here are some useful strategies to consider:
Without a strong inventory management strategy, your business is at risk of tying up too much capital in its stock. This has a negative impact on your liquidity and flexibility.
Effective inventory management involves striking the right balance between having enough stock to meet customer demand and minimising excess inventory that can lead to obsolescence and high holding costs. Here are some important inventory optimisation techniques for commerce companies to consider:
To help commerce businesses maintain an optimal cash flow, Juni has developed financing solutions developed specially to address the common challenges that commerce businesses face.
Here are some of the cash flow solutions available to you through Juni:
Juni helps you bridge the CCC gap by providing the liquidity you need to keep operating smoothly while waiting for sales revenue to come in.
Juni offers flexible credit lines that you can use for advertising, inventory and scaling your business. With Juni credit cards, you can access interest-free financing. This helps you to manage your cash flow and allocate funds effectively.
With Juni, you can use credit to finance your invoice. You can settle your invoices now and extend repayment terms on any invoice, freeing up your cash flow and enabling better negotiation with suppliers. You get up to 120 extra days to settle your invoices.
By helping you maintain your cash flow, Juni gives you more bargaining power when re-negotiating payment terms with your suppliers.
With secure business accounts and corporate cards from Juni, you can simplify card payments for employee expenses. Our multi-currency IBAN accounts streamline your local and global payment flows, reduce complexity and help lower your costs with fixed FX fees. Juni's virtual cards also come with custom controls, so you can set spending limits and manage expenses more effectively. Plus, you can earn up to 1% no-caps cashback, paid out to your Juni account 30 days after each month-end.
Juni provides a smart dashboard with access to over 2,400 integrations to consolidate all your spending data in one place. This helps you keep better control over your finances. Our dashboard also provides financial insights that enable you to make informed decisions and identify areas where you can optimise spending.
Ready to start optimising your cash flow? Every commerce business benefits from ensuring a stable, optimal cash flow. By bridging the gap between spending and sales, helping you negotiate better payment terms and streamlining payments for employee expenses, Juni helps you overcome cash flow problems and grow your business.
Learn more about how Juni can help your business start extending its runway in as little as 24 hours. Sign up today and start optimising your cash flow.
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