Boost Your Sales: Enhance Data and Cash Flow Management for Success

Intro

Whether you are a seed-stage startup or a Fortune 500 company, managing cash flow is crucial to keeping your business up and running. While there's no escape from running into cash flow issues once in a while, there are a few tried and tested ways you can use data for better cash flow management and skyrocket your sales.

In this article, we are listing down seven such expert strategies. But first…

What Is Cash Flow Management?

Cash flow is the amount of money going in and out of your business. It includes everything from cash tied in operating and financial activities to cash flow from investments and fundings.

Through cash flow management, you plan, track, and control every element of the cash flow in your business. It's an important aspect of a company's financial planning. With the right management, you can stabilize your business in turbulent times, such as default loans or bankruptcy.

When tied to data, your cash flow management process can become the powerhouse that fuels your business's growth (and sales). From strategic decision-making to enhancing sales performance, leveraging data can help you manage your business cash flow like nothing else.

Here are seven strategies you can implement in your business for better cash flow management with data to improve sales:

#1. Focus on Accurate Data Monitoring for Cash Flow Forecasting

Data analysis is the primary source of information businesses use to make future cash flow projections. This includes predicting the amount of cash coming in and out of your business in the next week, month, quarter, or year.

Using data to monitor your cash accurately will give you a better understanding of your financial situation and gear you up for any future cash needs or shortages.

For example, if your business can cause a significant revenue dip due to the off-season in the next quarter, you can adjust your budget accordingly.

The key is devising a cash flow structure and regularly conducting data analysis. Leverage your eCommerce funnel to gain valuable insights on conversion rate, inventory, marketing effectiveness, pricing strategy, and more. Closely monitor your accounts payable, receivables, and inventories to track cash inflow and outflow for accurate planning and forecasting.

#2. Take Greater Control of Account Receivables

Account Receivables are all the outstanding invoices you have–the money owed by your customers that's yet to be paid. And while there's always a risk for late, or worse, missed payments, there are a few ways it can be minimized.

Incentivise or Penalize Customers:

Give your customers an extra incentive to pay early, like an exclusive discount or freebies. It encourages them to pay their invoices faster. You can then invest this early money to boost your sales further.

On the flip side, penalizing clients for late or missed due dates helps you ensure you get paid on time. However, for this, you need a strict invoicing policy that clarifies how much and when the clients will be charged for delayed payments.

Streamline Invoicing Process

With so many moving parts, it's normal for businesses to postpone invoice creation and collection occasionally. However, it does lengthen your day's sales outstanding (DSO).

Automation can be your answer here. Automating the invoicing process can help you generate and collect invoices. It also eases the payment process from the client's end as these e-invoices have built-in payment buttons, thus reducing friction.

#3. Accelerate the Cash Conversion Period with Better Credit Decisions for Fulfillment, Shipping, Handling, and Billing

Carefully check the customer's creditworthiness before extending their credit. The time involved in this decision-making process (credit decision) directly increases the number of days in your cash conversion period.

**Credit Decision **

For the existing customer, analyzing their current credit limit and the expected levels of business will play a crucial role in changing their credit limit. With this data on hand, you can anticipate their credit needs before time, thus drastically reducing the cash conversion period while improving the rapport with the clients at the same time.

But since you don't have any past relationship with new customers, you have to check their credit references, obtain a credit report, and check their banks to make the final credit decision.

Optimizing Fulfillment and Shipping

Efficiently fulfilling deliveries of your product or service is another key aspect of a faster cash conversion period, cash flow management, and overall customer satisfaction. Make sure you streamline these operations by:

• Inventory Management: Keep accurate records of your inventory for timely shipping and deliveries.
• **Shipping Partners: **For retail businesses, collaborate with shipping partners to make sure orders are delivered on time and at the cheapest rates possible.
• **Optimize Account Payable: **Integrate your account payable process with fulfillment and shipping operations for more synchronized cash outflow and cash flow management.
• Leveraging Order Tracking Systems: Allow your customers to track their orders/ project progress in real-time.
• Automate Handling Systems: Use automated systems for handling orders and manual tasks to reduce labor costs and human errors.

Billing Process

On completing every sale, issue invoices/bills that include:

• Date of invoice creation
• The customer's name and address
• Description of product or service
• Due amount
• Due date (plus incentive or penalty for payments)

For more convenience, offer your clients multiple payment options. Regularly review the billing records with bank statements and use e-invoicing for faster bill processing and payments.

#4. Aggressively Clear Stock

Items sitting on your shelf (or virtual shelf) means holding cash. The more stocks you own and the longer you have them, the higher your inventory costs. A study by McKinsey also shows that slow-moving inventory can tie up 10%-40% of a company's working capital.

That's why aggressively converting the stagnant inventory into liquid assets can significantly boost your sales and financial health.

Here are a few tricks you can use:

• Set aside a marketing budget for clearance sales on slow-moving items (a 10-20% discount is ideal for encouraging sales without harming your profit margins).
• Pair stagnant stock items with your best-sellers.
• Conduct flash sales and promotions, like weekend-only sales.
• Use email lookup tools for targeted marketing campaigns for clearance sales. For example, while planning a discount on slow-moving items, you can find and email customers who have shown interest in similar products in the past.
• Use loyalty programs to offer special clearance deals.

#5. Use a Hybrid Purchasing Model

Hybrid purchasing models are another popular and practical inventory management solution for businesses looking to cut costs while meeting customer demands. It combines both Just-in-Time (JIT) and Just-in-Case (JIC) inventory strategies to maintain cash flow and profit margins.

Here, you hold minimal stocks of non-core items so that you can cut inventory costs. The hybrid purchasing models allow you to adapt to changes in demand while mitigating risks quickly.

However, data has to play a central role here. For the right implementation, you must stay on top of your customer's needs and expectations in terms of products and services.

To implement this for your business and improve sales, you have to:

• Evaluate inventory requirements and differentiate between core and non-core items.
• Adopt JIT for non-core items to minimize storage costs and avoid overstocking.
• Use data for core items forecasting.
• Develop strong supplier relationships you can rely on for both JIT and JIC procurement.

#6. Minimize Operational Costs as Much as Possible

If cash flow is one of your business's major concerns, you have to cut out all avoidable costs. As a business, you have to put all your efforts into improving order values, forecasting future demands, and inventory and logistics management. However, for many companies, operational costs bleed out a significant percentage of the already scarce cash flow.

There are several ways you can minimize the operational costs, including:

• Streamlining the supply chain process: Examine your supply chain to find cost-saving opportunities. It can involve negotiating contracts, adopting more efficient cognitive strategies, or consolidating suppliers.
• **Optimizing manufacturing process: **Focus on reducing production costs with better forecasting and efficiency.
• **Adopting the right technologies: **Use tech to streamline automate-able operations (invoicing, data entry, etc).
• **Investing in employee skills: **Create employee handbooks to guide and train your employees to identify and implement cost-saving opportunities at the operational and even overall organizational level.

As your business grows, you will start to see more hidden and, often unavoidable, operational costs and excessive overheads that can restrict your cash flow. The key is to consistently review these costs through real-time data analytics and find areas you can work on.

#7. Predict Customer Orders to Match Customer Needs

Real-time data analytics is an incredible tool to improve your cash flow management by highlighting customers' needs and predicting what they might order next. Knowing what and how much product they need to order, you can allocate the required cash inflow in the right place–preventing inventory issues and wasted cash.

Integrating a CRM system can help you gain better insights into the client's upcoming needs and preferences. Next, you can use personalized marketing efforts to push the high-demand product to the clients before they even ask for it.

The results–increased customer satisfaction, improved inventory management, cash flow, and sales.

A Word to the Wise

Businesses around the world are using data and cash flow management to improve their sales. The above-listed strategies are a great starting point for you to start leveraging them for your business, too.

But don't just stop there. Keep experimenting, A/B test different tactics, and the sales report will show your efforts' positive results soon enough.