There's a reason why the finance industry refers to available cash as “liquidity.” Optimum liquidity allows money to flow down the rivers and tributaries of your organization's corporate structure. When it's not needed in one area, it gets redirected to another.
Unfortunately, most businesses don't run that way. Companies unintentionally install dams and drains that restrict cash flow or encourage needless spending. So what's a sometimes-cash-poor business to do?
Create Flexible Controls
Numerous factors can influence sharp changes in the company's cash flow: seasonable trends, invoice fulfillment, emergency spend. It can seem that the flow of money in and out of your business can be unpredictable.
All the more reason to concentrate on the factors you can control, such as employee spend. Look for software that allows you to track expenses in real time. This enables business owners to see expenditures at any given moment. Also, seek out platforms with the ability to adjust the amount of money available to individual employees or entire departments instantly. Our PEX Platform is an example of expense management technology which allows business administrators to enable spend while maintaining control. When employers can track and predict employee spending patterns, they can leverage liquidity much more strategically.
Update Expense Reporting for Employee Retention
If you use a traditional expense reporting system—where employees pay out of pocket and submit reports for reimbursement later—employers miss an opportunity to offer their employees a benefit while simultaneously saving the company money. When there is an established process to track and control cash flow, employers know exactly how much money is on its way out because they've allocated the spend in advance. At the same time, employee retention skyrockets because the company has given them one less thing to worry about.
Eliminating the need for employees to reach into their own pockets for travel, business lunches, and other expenses alleviates undue pressure for employees with little flexibility in their private financial lives. There is freedom in not having to keep track of the taxi receipts from a 10-day business trip spanning four cities. Gone is the hassle of petty cash, long reimbursement periods, and laborious expense reporting that requires more time for operations and less time for production.
Respond Quickly to Unexpected Expenses
Unanticipated expenses make themselves known at the most inconvenient times and can cause serious problems for new or struggling businesses. You've just nailed a lucrative account with a big supplier, and suddenly your office equipment goes on the fritz.
If you have a nimble, technologically sound expense reporting system, you can move cash around to meet current needs. Reducing cash availability for employees will fund emergency expenses and keep your business on safe financial footing.
Prepare Better Projections
Financial agility requires a basic understanding of how your business spends money. Expense reports come in after the fact. Your employees have already spent the money, so you have little choice but to approve it and fork over the cash.
There exists options where your finance manager doesn't spend hours processing these detailed reports. Instead, he or she reviews data in a convenient online dashboard and analyze the ways in which employees spend corporate funds. After collecting that data for a quarter, it becomes easier to project future expenses, and make recommendations for spend that will actually grow the business.
Sometimes, tried-and-true cash flow strategies become obsolete. If you take advantage of new processes, you can lead your company to greater success. Responsive employee spending solutions are completely scalable, so they'll adjust based on your business's growth.