How Payment Automation Improves Your Cash Flow

Cash flow is the inflow and outflow of money in a business. It is a vital metric for a business to measure its financial health. Apart from profit, a positive cash flow is essential for a business to sustain and grow itself. When there is more money coming in than going out, it is good for your business. While a prolonged negative cash flow means your business is spending more than it is earning. Managing cash flow efficiently is key to a business’s success. Payment automation helps you gain a better understanding of your cash flow, thus helping you better manage your accounts, and ensure you have enough funds to clear your bills and grow your business.

Why is Cash Flow Management Essential for a Business

You need enough money to meet your expenses and keep your business running. Having an update on the cash flow of your business gives you an idea about how much money your business has, or will need to meet future needs. Managing your cash flow lets you see patterns in costs and incoming payments. This helps you build scalable plans and survive the ups and downs of being a business owner. Positive cash flow also helps a business prove its creditworthiness and maximize the chances of loan approval. However, cash flow management is a major issue for many SMEs. More than 80% of small businesses shut down operations due to bad cash management.

How Payment Automation Helps You to Manage Cash Flows Efficiently

Payment automation simplifies the payment process, reduces financial risks, and improves the efficiency and quality of operations. Automating your accounts payable and accounts receivable process is vital as it helps you:

1. Better manage payments and balances through fast, secure, and accurate real-time insights.
With payment automation, you get access to real-time data including payment history and invoice status in a more organized way. This gives you a single view into all your payments, thus helping you avoid delays in payments.

Knowing about your working capital, availability of funds, expenses due, carried-over balances, average payable period, etc, you can cut costs like late fees, processing fees, etc. Plus, make more detailed, in-depth cash flow forecasts, and in turn more informed decisions for your business.

2. Reduce errors and risk of payment fraud.
Manual cash flow management is a tedious process. It is prone to errors, and outdated data. The problem is that even the smallest mistake can lead to big losses. Payment automation helps avoid this because all manual tasks can be automated, requiring no human intervention. Plus, it offers real-time data, audits, and accurate reporting for more detailed observation. It raises the flag whenever there is any discrepancy in info – be it invoices, e-mails, account information, purchase orders, etc. Be it chargeback fraud or card-not-present fraud, it is the merchant who has to bear the costs. With payment automation, you avail stronger security features including in-built authentication to evaluate buyers. And your customers’ data remains fully secured.

3. Negotiate with partners and build good relations with them.
By offering a seamless payment experience to your customers, you have a better chance to increase positive cash flow.
Payment automation features let a business bring in a strong UX as a brand. This helps you negotiate better with your clients and offer them a valued experience. With auto-payment, regular invoices and due payment reminders, and flexibility in terms of time, currency, and payment methods as well as incentives, discounts, subscription offers, etc, you make it easier for your clients to pay you.

While growing sales is good, being able to pay on time also helps. AP automation speeds up the invoicing process which also ensures you send your payments on time.

Novalnet Helps You Manage Your Cash Flows Automation

Working with trusted partners like Novalnet gives you access to high-end fintech services. From solving core issues like high costs, limited clarity, etc to improving your AP and AR processes, we help simplify cash flow management in many ways. If you are ready to begin your payment automation journey, we are here to help.

As a global payment service provider, we have extensive experience in helping Europe’s leading brands to process payments. Our technology helps you to accept payments globally in 125+ currencies in 150+ automated country-specific payment methods. From our instant payment plug-ins to our AI-based risk management tools, we have the resources to get your payments up and running in no time, and with zero hassle.

Speak to us today to know more.

Jose Augustine

Jose Augustine is the Chief Business Development Officer at Novalnet with extensive experience in European payment industry and a knowledge powerhouse.