If you are a business buyer who purchases supplies and services from vendors and manufacturers often, you may be wondering if there are ways you can protect your cashflow when making transactions onlineThis applies to small businesses and start-ups, but they can also be illuminatingly relevant for larger companies who want to keep their funds secure.
The truth is that many businesses struggle with their cashflowIt could be because they have unusual business models that delay their clients from paying them right away after they pay their suppliersIt can also be that they simply struggle with late invoice paymentsFinally, it can be a matter of allocating operational staff less than optimally.
In this article, we will discuss three methods that have become increasingly popular to navigate business buyingGet ready as we break down these methods and show you just how simple it can be.
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Use B2b Buy Now, Pay Later Services
B2B BNPL services, such as Biller, are a great way for business buyers to spread their payments over timeDepending on the BNPL provider your seller works with, you may be able to delay payment by 30, 60, or 90 daysYou may also be able to pay in instalments over a certain periodThis can really ease your financial burden and improve your cashflow if you follow business models that make it difficult for you to regulate your cashflow.
For example, if you are a construction company, you may have found yourself, time and again, spotting a large gap between when you pay for building materials and when your clients pay you for your completed workThat’s normal – clients may only pay upfront a certain percentage of the building costs at the beginning of projects, and they may wait until the build is finished before paying the restIn this situation, B2B BNPL can ease your financial burden as a business buyer of materials and supplies, allowing you to be flexible about when you want to pay.
B2B BNPL can be beneficial for sellers, too – as they get paid upfront without having to wait for your invoice, by the providerThis means both of you get what you want and find yourself in situations with improved cashflow and fewer awkward emails about late invoicesTherefore, if you are a buyer, look out for sellers who have BNPL implemented at checkout.
Automate Your Payments
Another way you can protect your cashflow as a B2B buyer is to automate your paymentsThis is a great way for you to stay on top of your invoices and payments and pay them when they arrive, so you do not incur late feesGenerally, the typical late fee for invoices averages 1.5% monthly interestIf you regularly make large orders, this can have a significant impact on your funds.
By automating your payments, you also save the time and energy of multiple accountants on your teamYou may simply have one employee tracking the status of payments at all times and verifying budgets as you go, instead of keeping an eye on accounts payable all the time.
If you are a smaller business with a healthy cashflow, automating your payments is a great way for you to start allocating your operational staff more optimallyIf you are a larger business with a healthy cashflow, automating your payments will make it easier for your staff to coordinate between teams and keep track records within the company system.
Track Your Expenses Closely
Finally, one of the oldest ways to protect your cashflow is just to be aware of it, regardless of your business niche and sizeIf you are an expanding business, it can be easy to lose track of your outgoing expenses by only focusing on your gross revenueTo protect your funds, you should check your business account balance every day and be aware of the recurring expenses you need to pay.
Some ways you can track your spending is by dividing it into categories, such as fixed and variable costsFixed costs are monthly or recurring expenses that you must pay, and this includes your employees’ salaries, bills, rent, insurance, maintenance of offices and purchases of office suppliesVariable costs are the transactions you make to obtain raw materials and services on which you build your business, taxes, operational costs, marketing campaigns, and more.
If you have a strong understanding of where your money is going each month – and how much of it is going – it will make it a lot easier for you to find gaps in your accounts and cut unnecessary costsIt can also help you make informed cashflow and transaction decisions in the near futureMany companies hire accountants or bookkeepers to perform this taskHowever, if you are a start-up, you can also do it yourself.
Why Protecting Your Cashflow Matters
At the end of the day, your company is only as successful as how you run itProtecting your cashflow matters because you are in business to make a profit, and you want to make sure you succeed in doing soCareful financial planning can prevent you from falling into debt, and it can also help you make sure you pay your employees and suppliers on time.