The current “supply chain crisis” has spurred a second, less visible crisis in cash flow. If you’ve paid for goods that are sitting in a ship off San Pedro, California for a month, you’ll understand the kind of pain we’re talking about. You can’t convert those goods into cash until they come ashore. Until then, you better hope your cash management strategy will keep your business alive until this gets worked out.

ERP and Financial Management

Enterprise Resource Planning (ERP) software, especially the new generation of cloud-native ERP solutions, enables financial managers to stay on top of cash flow more effectively than standalone accounting packages. The reason for this has to do with the relationship between cash flow and other aeras of the business. Cash flow is not really about cash. It is, of course, but the forces that affect sources and uses of cash are people, sales order management, inventory management and so forth. An ERP solution tracks these non-cash aspects of a business that affect cash flow.

Finding the Right ERP for Cash Management

Acumatica Financial Management can provide instant and actionable data from every operational area of your business. This will be a relief if you have been relying on manual processes, spreadsheets or outmoded software. You have probably had a hard time knowing how various cash-influencing aspects of your business were functioning.

ERP is able to manage every piece of a company’s financials, not just the General Ledger (GL) and Accounts Payable and Accounts Receivable. You can now align your complete operations with cash flow management. For example, you will be able to see the actual dollar impact of that delayed container ship—so you can plan around it. You might need to draw down a line of credit to cover the costs, but with ERP, you’ll be able to plan for repayment based on data you have from your sales orders.

An optimal cloud ERP solution will monitor cash flow across all accounts in real time. Also, it will:

  • Manage overdue invoices
  • Manage capital and inventory visibility
  • Produce accurate financial forecasts
  • Provide accurate data anywhere, at any time, on any device
  • Bill your customers accurately and promptly, and improve repeat business
  • Prevents backorders
  • Encourage clients to pay you faster
  • Let you know where you need more business lines of credit
  • Cut costs and see where you can delay payments, when available

Focus on Controlling Your Inventory and Costs With ERP

Inventory, in particular, can affect cash flow. Cloud inventory management helps you stay on top of factors such as stock levels, as well as warehouse labor. Acumatica, for example, provides every user access to real-time inventory access across every function, from any kind of device. Departments have a clear view of information required to do their jobs. ERP allows for seamless communication within the organization and with customers, with accurate and updated data, e.g., a sales manager does not have to call the warehouse to figure out if a product is in stock. And, if a product is out of stock, Acumatica’s smart replenishment tools help you with inventory control. You’ll keep just enough inventory in the warehouse to prevent backorders or be able to order more to keep ahead of the supply chain bottlenecks.

To learn more about how ERP can help you get better at cash management, watch our Acumatica demo or contact us for an informative dialogue.

Additional Financial Management Resources

Accounts Payable: Top Challenges and How to Solve Them

The General Ledger: A Company’s Big Book of Everything

Take the Pain Out of Your Month-End Close