We countdown five ways technology can free up finances
1. Accounts payable
Automating accounts allows the buyer to offer suppliers the option of being paid early in return for a discount, bringing an immediate benefit to cash flow. The buyer can choose to use its own surplus working capital or can conserve it by using a third-party financer to fund the transaction.
2. Accounts receivable
The supplier can automatically opt for early payment, providing working capital for wages and other bills or for investment elsewhere in the business, such as new machinery. The discount from such supply chain finance can be cheaper than raising funds from other means, such as a bank loan.
3. Inventory management
Even for relatively small companies, effective warehouse and stock control can be a huge challenge. Technology that was once available only to the largest organisations can now be used to track goods accurately, avoiding excess stock or stock shortages and making more efficient use of space.
Electronic procurement or e-procurement saves time, avoids unnecessary spending, eliminates waste and can be used to reduce the number of suppliers to make the supply chain more efficient. It can help secure lower prices by building in discounts for bulk purchases or early payment and by holding online auctions to create competition among suppliers.
5. Cash-flow forecasting
Businesses are adept at using systems such as enterprise resource planning (ERP) to generate efficiencies in supply chain management, project management and human resources. ERP, specialist treasury systems or bank software can be used to automate cash-flow forecasting, improving financial visibility, and enabling better management of risk and liquidity.