Cash Flow Management Mistakes to Avoid

Cash flow management is critical to running a successful business, but can be complex and difficult for companies to manage. However, without cash flow optimization, organizations have less cash for operations, leaving them more dependent on external financing and limiting their ability to take advantage of timely investment opportunities or cover unexpected business expenses.

Why Your Cash Flow Management Strategy is Failing


There are several common pitfalls that can ruin cash flow optimization efforts. These include:

  • Lack of Leadership Buy-In: Companies that are successful at cash flow management take active measures to involve managers in every department, not just finance. By taking an integrated, cross-functional approach to cash flow management using key performance indicators (KPIs), companies can improve their cash flow, enhance business growth and take advantage of timely business opportunities.
  • Reliance on Manual Processes: The majority of modern payables and collections processes are manual and heavily reliant on paper invoicing. Manual processes and paper invoicing are costly and inefficient. They also make it difficult to manage financial transactions, capture discounts effectively and reduce vendor inquiries. A quarter of companies report at least 10 percent of their invoices as lost or missing. Direct Insite’s AP e-invoicing solutions can help companies streamline accounting processes and eliminate lost or missing invoices. These technologies decrease the invoice processing cycle from 23 days to five, enabling organizations to increase AP accuracy and efficiency as well as improve supplier relations.
  • Ineffective Discount Capturing: While discount capturing is a priority for most AP professionals, only a quarter of them can capture discounts accurately according to research by Direct Insite and PayStream Advisors. Direct Insite’s discount management solution, known as PAYBOX®, helps organizations obtain more discounts from suppliers with better rates of return. This enhances supplier relationships and improves working capital. Suppliers also benefit from improved cash flow, more predictable payments and less profit loss from unearned discounts. PAYBOX® also features interactive reporting, real-time cash flow analysis based on applicable discounts and improves visibility of discount offers. This offers executives and AP staff insight into key performance indicators and accounting data to help them improve decision-making and increase profitability.
  • Focus on Short Term Fixes: Finding a short term fix for cash flow problems can seem like the easiest solution. However, increasing cash flow by slowing down payments, speeding up collections or starving inventory will not solve the fundamental financial issues your company faces. You need to develop a sustainable, continuous process for cash flow optimization instead of relying on surface-level improvements.

Leveraging technology to increase accounts payable automation will reduce costs, enhance control over the financial supply chain and discounting, improve visibility, manage spend, reduce invoice processing cycle times, reduce working capital requirements and free up cash flow.

Direct Insite’s PAYBOX® solution addresses all of your invoicing and automation needs. From supplier portals to vendor management, Direct Insite’s solution makes it easier to improve AP performance and efficiency and achieve positive long term business results. For more information or to arrange a private consultation, give us a call at (631) 873-2909.

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