Are you worried about what potential economic turbulence could mean for your business? Don’t worry, you are not the only people worried about this as we continue to hear more doom and gloom about the economy.
However, the most important thing you can take out of this is to ensure that you are remaining proactive and preparing for the worst-case scenario to not only steer your ship through troubled waters but also to take advantage of any potential opportunities that crop up.
The team here at Advantage has taken relevant steps to help our customers to protect cash flow, optimise their inventory and continue to work towards long-term goals.
In this blog article, we will provide you with a number of approaches your business & ERP system can take to prepare for potential economic turbulence.
Put invoicing and collections to the top of your priority list before cash flow becomes tight!
The first thing that you need to do is to review your existing invoicing and collections process to make sure that it is as automated as it can be. The great thing about ERP systems such as Business Central is the fact that they can help you set up automated invoicing and show you via interactive dashboards the orders that require you to send them manually. The key to fast payments is a timely invoice.
Be sure to analyse your payment terms. This may seem obvious; however, it can sometimes be ignored. Reviewing a customer’s credit score by paying a small fee could prove to be useful in the long run. After this task has been completed, you will then be able to set payment terms that reflect a reasonable timeline for payment. This is where Business Central is great as it can give you a whole host of options such as AI and Machine Learning features to forecast any delays in payments from your customers.
Once you have sent out the invoice to your customer, you will then need to take the necessary steps to be able to prompt a payment. As well as setting these out on your payment terms, you could also try to make it as easy as possible for customers to pay, by adding payment links on their invoices. Payment links on invoices and statements can pay dividends and have been proven to reduce overdue invoices by around 25%.
If all of the above doesn’t work, then you will need to call the customer directly and log every conversation you have with them.
Assess whether or not you should cut loose problematic customers
Granted it can be a difficult choice to make to cut loose customers given how much effort you went to get them in the first place; however you need to be able to separate valuable customers from problematic ones. It could shock you to realise that a customer that you believed was performing well isn’t actually as profitable when you consider the time & resources spent on dealing with system issues, slow payments.
This is why it is important to set out KPIs to enable you to review customers and remove any bias you may have during the decision-making process. You will notice that most ERP systems will allow you to rate a customer which can help you when it comes to analysing data and making informed decisions.
Look into the cost-benefit of your relationship with the customer. You are more than likely to find that some customers who spend significant amounts of money are also not very easy to deal with on a day-to-day basis. To help you to assess the value of a customer, consider some of these questions:
Forge & maintain good relationships with your vendors
Ensure that you talk about payment terms with your vendors before your competitors do the same thing. This involves asking them to review your account and put forward arguments as to why they should treat you in a favourable way over others. The following things need to be considered:
Review your inventory to maximise efficiency as well as cost savings
To allow you to save money and stay ahead of the game during economic turbulence, it is vital that you have a comprehensive view of your inventory levels and purchasing decisions. You can achieve this in some of the following ways:
Revolutionise your operations to improve your overall efficiency
Make sure that you carry out a value stream mapping exercise to see where inefficiencies are occurring in your current processes. Assess whether or not the customer would want to pay for the process should they know about it. It is important not to forget that streamlining processes can help improve your overall operations as well as help to reduce costs.
If you have read the above and are needing help to get your Business Central system ready for any potential economic turbulence or are looking to invest in an ERP system such as Business Central by taking advantage of one of our Quick Start ERP packages then please give our team of Business Central experts a call today to discuss how we can help you to transform the way you work.
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