Did you know that you can use business intelligence to improve your company’s cash flow? The use of business intelligence is common in many industries but using it for the specific purpose of improving cash flow may not be well known. Here’s how your business intelligence system can help you get paid on time, almost every time, so the cash continues to flow.
What Is Business Intelligence?
Business intelligence software collects, stores, and analyzes data. This information is often depicted graphically, in the form of data visualizations such as charts and graphs. Business intelligence systems often include data mining, descriptive analytics, and performance benchmarking. These systems can help companies understand their numbers and progress towards goals.
Three Ways to Use BI to Improve Cash Flow
For most small businesses, cash flow is their lifeblood. Knowing there’s enough cash coming in to meet current obligations is vital. But keeping track of cash flow can be challenging, especially for small teams who are forced to wear many hats.
This is where business intelligence software can really make a difference. With graphic, visual representation and insight into the numbers, your BI software can help you improve cash flow and improve basic financial management. Here’s how BI can help.
- Identify how much you owe (and to who). In order to ensure you can meet your cash flow obligations, you have to know what those obligations are—and when they’re due. Using the tools in your business intelligence system, you can quickly see when bills are due, who needs to be paid, and the payment terms. Then, if necessary, you can take immediate action to request changes to credit terms, prioritize payments, and schedule upcoming payments.
- See who owes you money. The opposite of knowing how much you owe is how much others owe your company. Knowing how much is due your company can also help you manage your cash flow better. Business intelligence enables you to view both accounts payable and receivable to ensure you’re on top of both cash coming in and cash going out to meet obligations.
- Understand timelines. Lastly, it’s important to understand when payments from your customers are expected so you can manage funds around those payment dates.
Balancing cash inflow and outflow is an art (and a bit of a juggling act). To ensure you view your cashflow from all angles, consider running the following reports quarterly, monthly, and perhaps even weekly, depending on your business needs:
- Balance sheet
- Open accounts receivable
- Accounts payable due
- Cash flow statement
Periodic review of these statements is essential to understanding your company’s cash flow. It’s also important to update your accounting software regularly, including reconciling bank statements and credit card information, to keep the system updated on current transactions.
Renegotiate Payment Terms
Lastly, you can use your business intelligence software to renegotiate payment terms with creditors, if necessary. It’s a good practice to request the longest possible payment terms whenever you set up credit terms with a vendor. If, however, you need some leeway in order to meet financial obligations, business intelligence software can provide you with information on your current terms with each vendor, which will enable you to contact them to renegotiate the terms.
Business intelligence software provides a great deal of useful and valuable information. As a small business owner, you can’t afford to be in the dark with any aspect of your business, but especially not cash flow issues. The sooner you get a handle on your cash flow situation, the better you’ll sleep at night knowing you have the funds to pay important bills—including your own salary!