How to Improve Your Cash Flow with an ERP System?

AMRUTHA P V | March 01, 2023

How to Improve Your Cash Flow with an ERP System?

The success of any business depends on a healthy cash flow. Financial instability and even bankruptcy can result from cash flow problems. What can you do to improve your company's accounts receivable cash flow? Your cash flow metrics will improve with an ERP accounts receivable module that streamlines your A/R process.

ERPS: What Is It?

Enterprise Resource Planning systems (ERPS) integrate all core business processes into a single software application. With an ERP accounts receivable module, businesses can manage receivables and cash flow more efficiently. This module can assist you in improving your invoicing process, tracking customer payments, and identifying late payments.

How does ERP automation help improve cash flow?

There are some ways ERP automation can improve your cash flow. When selecting software, prioritize the features that matter most to you.

1. Automated Work Processes

Your staff can better manage its workload with the assistance of automated work processes. It frees them up to focus on more challenging and fulfilling work that calls for human intelligence by removing tedious and time-consuming tasks from their job duties.

2. Better Customer Service

Better service to customers can be provided with an effective accounts receivable procedure. Customer satisfaction and solid relationships can be maintained with prompt and accurate responses to inquiries. The independent invoice management feature will also delight customers.

3. Faster Invoice Process

You can quickly and easily create invoices with the ERP system's accurate and current information. As a result, your turnaround time for accounts receivable will be reduced due to this faster delivery of invoices.

4. Real-Time Data Analytics

Real-time reports can be generated by ERP systems. This information can be used by managers to make decisions quickly. It can also be used as a tool for transparency, allowing employees and the AR team to monitor company performance.

5. Reduced Errors

Errors in the accounts receivable process are reduced by automated ERP systems. There may be fewer disputes over invoices and faster payments if errors are reduced. Additionally, it lowers the likelihood of cash flow shortfalls and missed opportunities.

6. Track Customer Payments

When a customer makes a payment, you'll know right away, and you can look for patterns in payments over time by tracking them. You will be able to make better decisions regarding credit terms, discounts, and pricing with this information.

What are some important indicators of cash flow?

There are numerous accounting KPIs. Using too many can, however, become overwhelming. From these top choices, narrow your choices.

1. Accounts Receivable to Sales Ratio

The percentage of sales that are subject to accounts receivable is determined by this measurement. The better, the lower the number. Fewer sales are held in accounts receivable, freeing up more cash for the business.

2. Cash Conversion Cycle

The number of days it takes for a business to go from cash in to cash out is calculated using this metric. The number of days it takes to sell products, collect receivables, and pay suppliers are all included in the cash conversion cycle. Better is a shorter cycle.

3. Days Sales Outstanding

The average number of days required to collect payments on accounts receivable is measured by DSO. Your AR team's collection performance improves when there are fewer days. Additionally, it suggests a lower likelihood of cash flow issues.

4. Inventory Turnover Ratio

The number of times a company's inventory is sold and replaced in a given time frame is the subject of this metric. The better the company's liquidity position, the higher the number. Additionally, it indicates that the business is making more money from its inventory.

How can an ERP system be utilized to its full potential?

To get the most out of cash flow automation, optimize your ERP system. Here are some pointers:

  • Modify the ERP system to meet your particular requirements. Don't be afraid to ask for help from an ERP consultant or software vendor.
  • Examine your accounts receivable procedure and identify areas for efficiency enhancement. Do this often, like once a quarter.
  • Educate your staff on how to use the accounts receivable module of the ERP system. To fully utilize its capabilities, they should be familiar with its features.
  • To gain a deeper comprehension of the data associated with your accounts receivable, make use of the ERP system's dashboards and reports.

What Is the Importance of Cash Flow Management for Business Success?

To pay bills, make investments, and cover other costs, businesses need cash flow. The company will struggle to survive if cash flow is poor or nonexistent. As a result, businesses must comprehend and improve their cash flow. Real-time data analytics and automated accounts receivable processes are both features of an ERP system. With these and other tools in place, businesses can ensure success while enhancing cash flow.

Why Choose Sanesquare Technologies?

To provide our customers with the best possible solutions, we have spent several years perfecting our software. Due to the elimination of repetitive tasks, these companies' employees also report higher levels of job satisfaction.

You've come to the right place if you want to use the best ERP system for your business. Sanesquare Technologies offers the best ERP services in India. Sanesquare Technologies can help you select the best ERP solution for your business, and the value of ERP far outweighs the initial costs, labor, and time required for deployment. Get in touch with us for more details.

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