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Credit: Josh Appel

Money matters: mastering cashflow in a costly climate 

Businesses are feeling the heat of rising costs and the impact it is having on their cash flow.

Inflation, supply chain disruptions, flooding, and global conflicts are driving the cost of living, salaries and wages, and goods up while the Reserve Bank of Australia (RBA) continues to raise interest rates.

In 2022, the cash rate set by the RBA rose by three per cent per annum and was tipped to rise further in 2023. (1) The cost of living will only get worse before it gets better, which will likely have a knock-on effect on how businesses operate. 

Fabian Calle, managing director, small and medium business, SAP Concur Australia and New Zealand, said, “In addition to external factors influencing cash flow, running a business comes with its own financial challenges, from overhead expenses and inefficient inventory management to capital expenditures and unexpected expenses such as equipment failure or natural disasters. 

“This is compounded by the difficulties of tracking spending trends and making informed decisions about cash flow, budgeting, and forecasting. The manual process of expense and invoice management can also be challenging, especially when policies are unclear or confusing. Fortunately, there are many strategies that can be implemented to improve spend control and compliance, ultimately leading to better cash flow.”

There are three key ways to gain control of spending and boost a business’s finances:

1. Forecast flow and costs: a clear understanding of a business’s cash flow and expenses can help increase resources and redirect money when it’s needed mostUsing technology to automate financial processes and operations can increase transparency and provide near-real-time visibility into what’s being spent and why. In turn allowing for more strategic business decisions, reducing the risk of expense reimbursement fraud, tracking and analysing expense trends, and pinpointing opportunities for cost reduction. The more visibility business leaders have, the more they can control spend and grow profitability. 

2. Consolidate company spend into one place: employee spending can occur in a myriad of ways, including through travel suppliers, travel management companies (TMCs), credit cards, vendors, and even ride-hailing apps. It’s important to capture this data as it occurs, and having a single repository for all this information is critical for effective decision-making. By gathering data from multiple sources into a single platform, businesses can see spending no matter where or when it occurs and reduce the time spent in the weeds of expenses and invoices.

3. Maintain compliance: maintaining compliance is crucial in improving cash flow. By making the purpose of policies clear to employees, they are more likely to follow them, which can help streamline spending decisions and reduce the risk of tax penalties. Regular audits, whether performed by humans or automation, can also help identify persistent out-of-policy expenses and identify employees who should be audited more often than others. By satisfying tax and other regulations and avoiding fines or penalties, business leaders can protect the profitability and stability of their operations.

Fabian Calle said, “The hope is that the cost-of-living will ease of over time, stabilising prices and increasing consumer demand for goods and services. However, uncertainty is a daily reality for businesses of all sizes, and opportunities or challenges can arise at any moment. It’s important to ensure operations are running efficiently, whether times are good or bad. 

“With an automated invoice management system, managers can effectively oversee spending and help the business run at its best. By automating expense reports, invoice approvals, and implementing smart safeguards, business leaders can ensure that spending policies are followed, bad spending can be prevented, and tax and regulatory requirements are automatically taken care of. As a result, they can bring control to each spending moment to turn those moments into a better future for the business.”

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SAP Concur

SAP Concur

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