How CFOs can keep expenses simple with Pleo
At least once every year in the UK, over two million employees don’t get paid on time. In most of those cases, poor cash flow management is to blame. But the irony is that these incidents need almost never take place. Following a few simple rules – and learning from the experience of others, can help companies avoid this pitfall.
Be data driven
“The more information you collect, and the more diligent you are, the more you’ll spot trends […] and you’ll have a better overview of the timing of payments.” Sam Bradley, Head of Finance, Cookson Adventures.
When the business owner or head of finance knocks on your door asking about cashflow, having figures that you’ve already collated and had time to analyse means that your responses can be proactive rather than delayed.
Digitally managing expenses, invoicing, and cashflow, frees up finance professionals’ time to pore over figures and spot trends that take months, if not years, to become fully apparent.
Understanding what’sbehind the figures is important in businesses of any size: after all, managers want solutions, not suggestions or guesswork.
Squirrel away some cash
“There’s nothing worse than trying to raise money whilst your cash balance runs low. Two things happen: Enter desperation mode for raising finance and maybe take a worse deal than if you weren’t in survival mode. And two: You start curbing spend to try and stretch out the runway until the raise closes.” Robert Collings, Head of Finance, Flux.
Large unforeseen payments can hit a company at any time despite forecasting. Rather than allowing outside influences to change the strategic direction of the business, having an insurance policy in the form of easy-access liquidity keeps the business on track.
Visibility into all aspects of spending will show that the need to make unforeseen payments happens often, to varying degrees. The right software will surface the evidence of this at the click of a mouse.
Expect there to be bad times
“If it’s something you’re expecting, [a cashflow deficit] may not necessarily be an issue.” Sarah Ashworth, Head of Finance, Dead Happy.
During profitable times, companies get over-confident and over-trade. Understanding how much growth a business can handle can mean a big difference between circumstances having a lasting impact and being absorbed by a healthy business.
Keeping tabs on spending and expenses allows financial professionals to advise when the organisation needs to boost growth activities and when to scale back.
Keep it simple
“I need to free up as much time as I can to work on bigger projects and move the company forward […] And so usually you say cash is king. But for me, simplicity is queen.” Soren Alnoe, COO, Celvivo.
Applying the 20/80 Pareto Principle (20% of your activity creates 80% of your results) allows companies to distil many similar inputs into a company’s financial forecasts and surface the main priorities for attention. That means finance staff can dedicate time to key strategic imperatives rather than sweating the small stuff.
Automate and Digitate
“Our whole process is simplified. From purchasing with a Pleo card to exporting into our accounting system to using a SaaS tool for following up on late invoices.” Mattias Sjolin Madsen, CFO Heymate.
Computers are great at very specific jobs. Luckily, one of those is the mundane collation and transformation of figures – usually a manual process that’s rife with errors. Repetitive tasks waste the time of qualified finance people and boredom and repetition create errors.
Pleo provides a large range of spending management solutions that start with expense management and extend to scheduled payments to all bills and invoices at a level of automation that suits the individual company.
Thanks to leading digital solutions like Pleo‘s, keeping on top of finances makes cash flow and expenditure predictable, manageable, and controllable. Rather than leaving core aspects of the business to chance, such as cash flow, and having to react according to the cadence of outside influences, Pleo-powered companies are on the front foot.
Want to know more? Find out how you can get a grip on cashflow [PDF].
1 December 2022
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