Continuous cash flow and efficient credit management are essential to the success of running your business efficiently without any issues in the process.
What is cash flow management?
The management of cash flow will ensure that there are sufficient funds are flowing in and out of your company. It is essential to have enough cash flow to ensure that you can ensure that your business is running smoothly and pay your employees and ensure that your equipment is maintained.
Cash outflows are also crucial because you must improve your procedures and equipment that can accelerate the processes currently in place. Keeping the best cash flow is crucial in India and ensures that your business produces enough funds.
Is credit-management a concept?
It is the method of studying and reviewing the creditworthiness of a business to determine the amount of credit you are able to extend to them. It could be that you are dealing with customers, suppliers, debtors and clients who require credit to be extended.
A well-organized credit management system assures that you’re collecting your debts on time, accurately calculating interest and avoiding a negative financial situation from arising. The success of managing credit relies on the ability of a company to establish the credibility of its customers.
How can credit management help improve cash flow?
Cash flow and credit management are interlinked since cash flow can be dramatically enhanced when you learn to manage credit.
If you are in charge of credit, it is important to ensure that you are paid in a timely manner by your suppliers. This is why there is a lower chance that you will get into cash flow problems since you are aware of the cost of the products you purchase from them. This ensures that your expectations are realistic and helps ensure that you have a steady flow of cash.
1. Recovering the outstanding invoices on time
One of the most important aspects of managing credit is keeping track of and collecting the outstanding invoices as quickly as possible. If you keep a close eye on payments and invoices, you can determine when it is time to collect them and follow-up on those that haven’t made payment until the deadline. This makes sure that you have enough cash available in your business and minimizes the risk of that you’ll incur bad financial debt.
2. Regular credit checks and better ones.
Regular credit checks are an essential aspect management of credit. While at times, it might appear like giving customers the option to pay in a month or two later an excellent idea, it’s not. This is especially applicable to clients who tend to pay late rather than earlier. When you conduct the credit check, you are ensuring you’re following the credit management plan that you developed. This helps improve cash flow since it assures that you’re collecting the payments on time.
3. Reminders for payments
Credit management includes taking every step you can to remind customers to make their payments. One way to do this is by sending reminders to pay. Sometimes, clients do not realize they must pay. A friendly, yet detailed reminder will ensure that they pay the payment on time. It keeps communication open and increases trust between both parties. In this way you can make prompt payments, which improves the flow of cash.
How TallyPrime aids in continuous cash flow and credit management
TallyPrime is a software for managing business that assists you in managing the flow of cash and credit to speed up payments and ensure a healthy flow of cash and monitor credit. Its advanced features will ensure you are in complete control of making payments.
1. Controlling your payables and receivables is essential for every business.
TallyPrime automatically creates an individual bill reference which is used to track all outstanding payments. This method of managing payables and receivables makes sure that you pay and receive payments promptly, thereby improving your business operations at every level. You can monitor those who owe you and the people to whom you owe money so that you’re always aware of your credit and cash flow situation at any time. These data can aid in better fund management.
2. Analysis of the ageing process
An analysis of ageing displays receivables according to the age of the account and assists in establishing your credit policy for your company since you can identify what customers are making payments past the due date. You can create an analysis of age with TallyPrime to know the pending invoices that have been waiting for a long period of period of.
When you are aware of the specifics of pending bills You can follow up and request payments in advance to improve your cash flow. The report can be created by selecting the style of ageing and time interval according to your preference, thereby giving you greater control over the creation of reports and a better understanding.
3. Multiple bill settlement
Are you fed up with bills piling up and not being able to pay them on time? TallyPrime’s option for multiple bill settlement solves your pending bills by allowing the payment of bills in the bulk. You can opt for the option of bulk payments and pay for multiple bills at once to have a quicker and a more seamless experience. This will ensure that you don’t have other bills pending and pays the entire amount in one step. It’s an easy and effective method of paying bills prior to their due dates.
4. Controlling the flow of funds and cash
Management of funds and cash flow involves monitoring and analyzing the cash flows and outflows the subsequent balancing. TallyPrime lets you know the current status in your cash flows and your flow of funds in just a few clicks by generating an report.
Once you have a clear picture of your money flow and cashflow, making the right decisions and planning your spending is effortless for the best reasons. It aids in a better allocation of resources, so that your business can run smoothly and without problems. It is a great tool to help prevent cash flow issues that could arise in the future, making sure that cash is always readily available.
5. Cash flow projection
The projection of cash flow is one of the most crucial aspects of managing cash flow.
The cash flow projections from TallyPrime are trustworthy and you can rely on it to make choices that allow your company to use cash in the most efficient way. If you are anticipating a large cash flow, you can put the money aside for future use or to purchase new equipment. If you are anticipating a low cash flow, you could concentrate on optimizing your operations using the smallest resources.
If you know what is likely to happen by knowing what is possible, you can better prepare to anticipate what’s in store for you.
6. Interest calculation that is seamless
With TallyPrime it is possible to precisely calculate interest by using simple or compound interest formulas that are automatically calculated, making sure those who are in the right place pay the correct amount when they are late in paying. This can help in ensuring correct financial management and cash flow.
7. Superior credit control technique
TallyPrime lets you perform credit control in a simple way. You can define an upper limit on credit for each customer by determining credibility. This ensures that you’re conscious of the credit limit prior to creating an invoice for sales. With the advanced alert function, you are able to discover if the client purchasing your product has prior unpaid debts. If this is the case, you can demand that the buyer pay the outstanding balance and continue to the process of billing.
Read More