Cash flow makes or breaks a business. In a 2020 survey of 5,800 small businesses in North America, researchers found that three quarters of the respondents said they had enough cash to last for just 2 months.
To increase liquidity, it is natural to look into where we can cut costs and reduce overheads. While this improves cash flow in the short term, resulting complexities could choke a business.
Here are 3 other ways fintech payment companies can improve cash flow to mitigate shocks, settle current liabilities and achieve growth at the same time.
Automate processes to increase productivity
While it seems counterintuitive to invest in automation when we should be conserving cash flow, automating backend processes provide continuous returns in the long run.
For example, switching to automated load testing has allowed us to process more transactions while also minimising human error. Our Kafka Connector Board has improved data streaming, enabling our partners to access valuable insights like payment trends.
Taking advantage of technology to automate repetitive tasks means we can focus on improving areas like user experience and site performance. This means faster checkouts, faster payments, less drop offs and more cash on hand.
Get paid quickly to settle current liabilities
Complexities in cross-border payments such as FX management and compliance may prevent businesses from getting paid quickly enough to settle current liabilities. After all, 45% businesses view slow payments as a main challenge, according to this Pymnts.com article.
If you face this problem, it’s time to take a good look at your accounts receivable and accounts payable process. Are you receiving payments on time? Are you paying your suppliers too quickly?
Upgrading your payment infrastructure with features like smart invoicing and automated collection through API integration can help your business increase cash flow.
Preserve capital by expanding carefully
Fintech payment companies that entered too many markets too rapidly may end up getting their funds locked in 1 currency, causing supply-chain headaches.
Therefore, it is important to perform a comprehensive cost-benefit analysis so that we don’t exceed our capacity to deliver. Consider our CEO’s advice: “Study existing infrastructure and regulatory support, the risk appetite involved… and if there’s enough demand from end consumers.”
You’d have known all this, but we’ve seen far too many examples of businesses that expanded too quickly and failed to preserve capital.
Conclusion
When it comes to improving cash flow, fintech payment companies can reduce overheads, but they can also consider investing in automation, focus on getting paid quickly and preserve capital by expanding carefully.
