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Effective cash flow management supports the growth of the digital services company (through investments, capital allocation, etc.).
Cash flow is more than just a financial indicator: it reflects the overall health of your business and helps you plan the steps needed to support your growth.
Effective cash flow management is therefore essential to a company’s survival. Here are a few tips for managing your cash flow effectively.
1. Develop a cash flow forecast
To draw up a provisional budget, you need to take into account your ecosystem and your activity. Having a global vision of your budget in the short and long term enables you to anticipate expenses and unforeseen events.
The COVID-19 crisis is a perfect example. As a result of the confinement, companies are seeing their business decline, and despite the aid offered by the government, decision-makers will have to carefully manage their cash flow to avoid going out of business.
Some planned investments will have to be postponed to compensate for the loss of business.
A well-structured forecast also helps mitigate the effects of seasonality and periods of low revenue. It provides a strategic foundation for medium-term decision-making.
With VSActivity, you can create and track your projected budget for a specific entity or fiscal year.
How do you create a projected budget using VSActivity?
- Open the
- Go to Financial Management > Budget Preparation
- A header that reminds you of the budget calendar you’ve previously set up, as well as any guidance notes and useful documents that may have been attached.
- An entry table for entering, updating and consulting budgets currently being entered or validated.
- Each budget value is at the granularity expected for good budget entry: by account, by entity (company, BU, etc.) and by month.
Several actions are then possible:
- Mass-load budgets using an Excel sheet.
- View the history of modifications made to the entry.
- Mass modify budget amounts for several items and a range of months.
- Delete (reset to 0) amounts entered for several items and a range of months.
- Modify the amount for the item and month of the cell concerned
- Delete (reset to 0) the amount entered.
You can load your budgets :
- Retrieve the list of available budget items,
- Retrieve the Excel template file,
- Send us your Excel file enriched with your budgets.
In addition, effective budget planning helps align financial goals with operational goals, which is essential for agile management of your digital services company.
2. Track metrics using a budget spreadsheet
To be able to forecast your working capital requirements, you need to monitor your key cash flow indicators.
VSActivity allows you to analyze and forecast your cash flow through reporting. You have all the KPIs you need to make the necessary decisions.
In fact, VSA will aggregate data from the modules—invoicing, purchasing, and HR—to provide you with an up-to-date overview of your cash flow. You’ll get an overview of the following:
- Customer movements (credit notes, invoices, etc.)
- Supplier movements (credit notes, invoices, etc.)
- HR movements (salaries, charges, bonuses, etc.)
- VAT (output tax payable, output tax deductible)
Monitoring this data in real time allows you to quickly detect anomalies or deviations from forecasts.
For example, a sudden spike in unanticipated loads can be quickly offset if you are able to identify it in time.
Analyzing your metrics also allows you to set up internal alerts and take proactive corrective actions. That way, you’re no longer at the mercy of your cash flow—you’re in control of it.
3. Remedy late payments
Late payments can seriously damage a company’s solvency.
If a company doesn’t receive regular payments from its customers on time, it won’t be able to invest, pay its employees, and so on.
Whether in the form of a table or a chart, VSActivity allows you to quickly identify customers with overdue invoices and send them payment reminders.
With vsa, you can create formal reminders via email or regular mail for affected customers using message templates. A reminder automatically includes a statement of outstanding balances and copies of the relevant invoices. Reminders can be sent in bulk. You can also simply log simpler follow-up actions by entering a free-form note or noting that a phone call was made.
You have a history to keep track of your actions.
By acting quickly, you can improve your cash flow without any extra effort. You’ll also help strengthen your relationship with your customers by adopting a clear and professional approach.
4. Did you say factoring?
Factoring is a solution that businesses are increasingly turning to.
If a company chooses to use a factor, it will transfer customer invoices to the factor every month, so that it can access cash quickly without waiting for them to fall due.
The factoring company, which is a financial institution, handles everything related to these invoices: tracking, follow-ups, collections, and even assuming the risk of non-payment if necessary.
VSActivity has a feature thatautomates invoicing.
This automation reduces processing times and streamlines transactions. This allows you to secure your financial flows while reducing the administrative burden.
Succeed in Cash Flow Management with VSActivity
Your cash flow is central to your performance. To manage it effectively, you need much more than an Excel spreadsheet.
VSActivity is the SaaS ERP designed for digital services companies and consulting firms. It allows you to:
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Create and track your cash flow budgets by entity or by period
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Automate customer reminders and ensure your payments are collected
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Simulate multiple management scenarios to better manage your budget
With vsa, your budget planning becomes simple, fast, and reliable.
Want to see how it works? Schedule a demo with one of our experts.
Bonus: You’ll receive personalized advice on how to structure your forecast and plan for your cash flow needs.
There you go—you now have everything you need to manage your budget effectively.
