Five steps to managing cash flow

Cash flow is one of the biggest challenges facing Singapore companies. Efficient management of expenses and business travel expenses, can significantly aid cash flow and there are a number of solutions available.

Here are five steps:

1. Free up lines of credit

It can be tempting to become over-reliant on the main line of credit for managing cash flow rather than using that money to invest in other ventures. Companies can ease cash flow pressures by making simple changes to operational practices. For example, a third party payment provider can pay suppliers on a company’s behalf but not require payment for up to 58 days. This helps improve cash flow, brings considerable financial benefits and strengthens relationships between the company and supplier.

2. Ensure greater visibility of credit

‘Surprise’ bills or unexpected expenses make managing cash flow a huge challenge. By simply automating expenses, either through the use of commercial cards or within existing systems, companies gain better visibility over incoming and outgoing sums, making cash flow easier to manage and control.

3. Travel and entertainment policies

Creating or updating travel and entertainment expenses policies allows companies to specify preferred suppliers. This not only ensures consistency across all travel arrangements but all costs are pre-agreed and closely monitored. Approving expenses during the claims process instead of pre-approving expenditure should be included in the expense policies to generate a sense of employee accountability and ensure there are no unwelcome surprises.

4. Effective forecasting

Businesses can gain a better overview of all expenditure and a greater understanding of potential cash pressures in the future by improving the visibility of all outgoings. Expense management tools ensure that businesses can track trends, including potential over-expenditure and excessive ordering.Having accurate information management systems and forecasting in place leads to tighter financial control and hopefully more opportunities for investment and growth.

5. Negotiate with suppliers

Data from expense management systems can give insights to help long term forecasting and invaluable for managing cash flow issues in the short term by flagging areas where costs are too high or inconsistent. This then allows businesses to consolidate suppliers and puts them in a stronger position to negotiate preferential rates going forward.

- Nigel Fox, Vice President and General Manager, Global Corporate Pyaments Singapore of

American Express -