Cash flow management is at the core of every business’s success, regardless of what industry you’re in. There are plenty of metrics for maintenance, asset management, and health and safety, but cash flow is the biggest component of overall business health. Maximizing your cash flow management involves looking at every step of the process from the product or service and invoicing to your business’s overhead. While that’s a broad range of things to consider and it will be different for every business, these are our top 5 tips to maximize cash flow management.
1. Digitize Your Service Ticket and Invoicing Process
If your company provides a service, then you likely have a process for job proposals, service tickets when work is performed, internal review, and finally invoicing the client. For many companies, this is still a paper-based process. Or, it’s a combination of paper, spreadsheets, and software, which requires many steps and data entry along the way. The more complicated this process is, the longer your billing cycle will be. Additionally, an inefficient process increases the possibility of inaccurate invoices. With Redlist, you can configure standardized processes for your entire quote to cash system, including job tickets, scheduling, dispatching, payroll, approvals, and billing. By digitizing this process, you use fewer resources, eliminate accounting backlog, and increase cash flow.
2. Automate Your Cash Flow Reporting
With cash flow being the lifeline of your business, you need to be able to make decisions based on real-time information. That means your cash flow reporting should be easy and accurate, which is best achieved through automation. When your data auto-populates key reports, you can move quickly in response to trends and accelerate your business growth. One Redlist user saved more than $40,000 in contracted labor simply by automating hundreds of hours of high-level reporting and analytics. Redlist’s Field Services and Dispatch module takes all of your client management, service ticket, timekeeping, and invoice data and automates the reports you need, including:
- P&L (Profit & Loss Overview)
- Opportunity Win/Loss Rate
- Overkill Report
- Planned vs. Actual Performance
- Available Hours of Service (HOS)
- CO2 Emissions Over Time
- Washout Percentage
- Financial Utilization
- Company Growth Over Time
3. Shorten Your Cash Flow Cycle
Once you digitize your process and have reliable, real-time reports, you can begin identifying your specific areas for improvement. The change that makes a big impact for most companies is shortening the billing cycle. A shorter billing cycle means the information is still fresh in your employees’ and your client’s minds. Missing line items can be addressed immediately, instead of weeks or months later when it is more likely to be disputed. Not only does this improve your cash flow, it greatly improves your customer experience and maintains a positive long-term relationship. Redlist enabled one company to reduce their billing and payment cycle by more than 85% resulting in the closure of a $450,000 accounts receivable gap. When it comes to cash flow management, even small improvements can lead to substantial results.
4. Optimize Your Inventory Management
Cash flow management isn’t just about getting accurate invoices out quickly. It’s also about managing your expenses, which includes spare parts, tools, software, sensors, and maintenance fluids like oil and lubrication. There are several aspects to inventory management, but these are the top issues that we see:
- Not using Mobile Device Management (MDM) – If you’re using software, then you’re likely using mobile devices. Loss, theft, or getting locked out of your company’s laptops, smartphones, and tablets has a negative impact on cash flow. An MDM protects against those problems along with other benefits.
- Paying for more software than you need – Many companies implement different software for each of their needs. Consolidating to one software can reduce your overall spending and make it a more efficient experience for your employees.
- Not realizing the full return on investments (ROI) – If you invest in IoT but you don’t have a system in place to realize the full benefits, then you’re missing out on ROI. Redlist integrates with IoT sensors, business management systems, GPS trackers, and oil analysis labs.
5. Eliminate Duplicate Work
Even what seems like a small duplicate work task adds up fast! For example, before using Redlist, a company had to convert paper service tickets to invoices that took an average of 11 minutes of labor per ticket. That doesn’t sound like much. However, after implementing Redlist, the total savings from double-entry alone was 2,292 labor hours or $45,833 per year. That customer’s total annual revenue recovered by using Redlist is over $1 million.
These 5 cash flow management tips may take time to implement in your business, but the results are worth it. Improved cash flow allows you to reach your business goals from entering new markets to expanding your staff and service area. Any one of these tips will help you improve your bottom line so you can stop stressing and focus on the great work that you do.