A seamless cash flow and credit management are the foundation of ensuring your business runs smoothly without a hitch throughout the course of your business.
What is cash flow management?
Cash flow management makes sure that there are the proper amount of money is coming to and leaving your company. There is a need for cash flow to ensure that you can ensure that your business is running smoothly and pay your employees and make sure that equipment is maintained.
Cash outflows are also crucial since you have to improve your procedures and equipment that can improve the efficiency of your current processes. Maintaining optimal cash flow is crucial in India and ensures that your business produces enough funds.
How do you define credit management?
It is the method of reviewing and analyzing the creditworthiness of a business to determine the amount of credit you are able to offer them. It could be that you are dealing with creditors, suppliers, customers and customers who require credit to be extended.
A well-organized credit management system assures that you’re collecting your debts promptly, correctly calculating interest and avoiding a negative credit situation that could arise. The success of managing credit relies on the ability of a company to establish the credibility.
How can credit management be improved? cash flow?
Cash flow and credit management are interlinked since cash flow management can be greatly improved when you are able to manage credit.
When managing credit, it is important to be sure that you are paid in a timely manner by your suppliers. This is why it is less probable to run into cash flow issues because you are aware of the costs of the goods you buy from them. This helps you set realistic expectations and guarantees a smooth cash flow.
1. Recovering late on outstanding invoices
One of the most important aspects of managing credit is tracking and collecting outstanding invoices quickly. If you keep a close eye on payments and invoices, you can determine when to collect the payments and follow-up on those that have not yet paid until the deadline. This makes sure that you have sufficient cash available in your business and decreases the chance of that you’ll incur bad financial debt.
2. Better and more regular credit checks
Credit checks on a regular basis are an integral element management of credit. Although, sometimes, it may appear that giving customers the option to pay in a month or two later is an ideal option however, it’s not. This is especially applicable to people who are accustomed to paying late rather than earlier. When you conduct Credit checks you are ensuring that you’re adhering to the credit management system you have developed. This helps improve cash flow since it assures that you’re collecting payment 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 payment reminders. Sometimes, clients do not realize they must pay. By sending them a friendly but detailed reminder will ensure that they pay the payment on time. The communication channels remain open and increases trust between both parties. This way you can make punctual payments, thus improving the flow of cash.
How TallyPrime aids in the seamless flow of cash as well as credit management
TallyPrime is a software for managing business that assists you in managing credit and cash flow 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. The management of your payables and receivables is vital for any business.
TallyPrime automatically creates an unique bill reference that will be utilized to track all outstanding payments. The proper method of managing payables and receivables guarantees that you get and pay promptly, thereby improving the efficiency of your business at every level. You can keep track of those who owe you money and whom you owe, so you’re always aware of your credit and cash flow situation at any given time. These information can help improve your funds management.
2. Analysis of ageing
A report on the ageing process displays receivables according to the age of the account and assists in establishing your credit policy for your business since you can identify what customers are paying over the due date. You can create an analysis of age with TallyPrime to know the pending invoices that have been in the queue for a long period of.
When you are aware of the specifics of pending bills and responsibilities, you can follow-up and request payments in advance which will improve cash flow. The report can be created by selecting the style of ageing and frequency according to your preferences. This gives you greater control over the report’s creation and greater understanding.
3. Multiple bill settlement
Are you tired of the pile-up of bills and not being able to pay them in time? TallyPrime’s option for multiple bill settlement will solve your outstanding bills by allowing you to pay your bills in large amounts. You can opt for the option to bulk pay and pay off multiple bills in one payment for a speedier and more smooth experience. It will eliminate additional bills to pay and will clear all of them at once. It’s an easy and effective method of paying bills prior to when they are due.
4. Management of cash and flow
Management of funds and cash flow involves monitoring and analyzing the cash outflows and inflows and the subsequent balancing. TallyPrime lets you know the current status on your flow of cash and your flow of funds in just a few clicks by creating reports.
Once you are able to track the flow of cash, taking the right decisions and planning your spending is simple for the best reasons. This helps with resource allocation, which means your business will run smoothly and without a hitch. It can also be used to avoid 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 utilize 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 save the money to be used later on or invest it on new technology. If you expect a lower cash flow, you could concentrate on optimizing your operations using limited resources.
Knowing what could happen by knowing what is possible, you can better prepare for the possibilities that lie ahead.
6. Interest calculation that is seamless
With TallyPrime it is possible to precisely calculate interest with simple or compound formulas that are automatically calculated, making sure those who are in the right place pay the right amount if they make late payments. This will help with the proper flow of cash and management of credit.
7. Superior credit control technique
TallyPrime allows you to carry out credit control with ease. You can determine an upper limit on credit for each customer by determining credibility. This ensures that you’re conscious of your credit limit before you create an invoice for sales. With the advanced alert feature, you will determine if the person 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.