30 September 2020

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UK businesses often fail not because they lack a cohesive strategy, loyal customers or viable growth but because of issues with cash flow.  

While mid-tier businesses are normally able to ride out fluctuating finances, in many sectors, the impact of COVID is pushing them against the wall. Without cash in the bank to cover operational costs, positive forecasts and projected profit won’t guarantee survival.

While businesses in less impacted sectors have been able to keep trading, many have had to close for a period, lie dormant or take a big hit on revenues.

So, what can they do?

Government COVID support schemes have been extended into 2021 and beyond but these are “artificial” fixes. They may keep viable businesses trading but don’t tackle underlying cash flow issues.

What about commercial loans? The pandemic has made lenders more risk-averse and loans and credit harder to obtain. Other solutions such as factoring, dynamic discounting and supply chain partnering can help short term cash flow but aren’t suitable for all businesses and need to be carefully considered.

Controlling expenses can take the pressure of cash flow

Business expenses including T&E and on-the-road costs can make up a sizeable chuck of OPEX, but as COVID changes the way many businesses operate, now is a good time to review how these are paid. Mid-tier businesses can have hundreds, even thousands, of expense generating employees, so outgoings can scale up fast – eating up cash, sapping time and racking up hidden costs. 

Card-based expense payment options, like Allstar Plus, can be a great way to fight back. Businesses can quickly take back control of a large chunk of cash flow by lengthening payment terms, increasing visibility over variable costs and tightening controls on spending. 

Here are four ways you can benefit:

1. Providing more flexible credit terms

By using a business expense card such as Allstar Plus, with an interest-free repayment period of up to 44 days, you can manage your business’ cash flow through increased flexibility on running costs, supplier payments and stock purchase.

2. Controlling spend ‘before’ it happens

Pre-spend controls on payment cards (right down to individual cards) helps recalibrate spending easily and ensures there is no ‘surprises’ or out-of-policy transactions throwing finances off track.

3. Giving extra leverage in supplier negotiations

Being able to access all expense spending data through a single portal gives key internal teams the detailed insight and ammunition they need to better consolidate suppliers and negotiate or source better deals on essential purchases.

4. Boosting productivity and revenue generation

Putting the right payment and expense management solutions in the hands of employees means much less time spent on receipt gathering and paperwork. Use digital capture and expense management over the cloud to keep them focused on revenue-generating activity, particularly when working on the road or from home.

Staying focused on expenses and cash flow

During the pandemic, many departments will have ploughed all their energy into overcoming operational challenges and keeping revenue flowing. But now more than ever, businesses need everyone to think with a ‘finance’ hat on when it comes to working capital and variable costs.  

The right payment options teamed with a unified expense management system can boost efficiency, cut down administration and provide a more flexible cash flow.

Get more ideas for tackling cash flow challenges: download Allstar’s report - How expense management needs to shift gear to keep pace with post-COVID-19 workplaces.

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