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December 9, 2022

How to Extend Cash Flow with Automated Bill Pay

Jessica Brooks

Everyone has heard that “cash is king” or “money talks.” It may sound cliché, but cash, and accordingly cash flow, are vital components of operational success in any business.

For many businesses, maintaining a consistent cash flow is a difficult task. According to Meta’s October 2022 report, 25% of SMBs reported cash flow issues as a challenge to their business - one of the most often selected challenges for SMBs.  

Luckily, with the right tools and savvy strategy, businesses can extend their cash flow and keep operations running smoothly.

One of those tools? A comprehensive spend management platform.

A spend management platform that automates bill pay can help businesses reduce manual work and create better internal processes - both of which can affect the bottom line and cash flow statements.

Let’s dive into the basics of cash flow and learn a few ways that automation can help to extend cash flow for your business.

The Basics: What is Cash Flow?

Cash flow is how much money goes in and out of a business. Money received by a company is cash in, and money that a company spends is cash out. Cash flow is measured with a cash flow statement, which breaks down a business’s cash flow into three categories:

Operational Cash Flow - cash earned by the business, minus operational costs like paying employees, vendors, interest payments on debt and tax payments

Investing Cash Flow - cash spent to grow the business or maintain its assets

Financing Cash Flow - money raised through financing (for example, loans received) minus cash spent (like principal payments on debt, dividends or share buybacks).

If a cash flow statement shows a positive cash flow, it means an organization is making more money than it’s spending, in turn generating value and producing cash that can be re-invested back into the business. Meanwhile, negative cash flow indicates that a business is spending more cash than it brings in. A business with negative cash flow could struggle to fulfill its obligations, or in the worst-case scenario, go out of business entirely.

What are Some of the Levers You Can Pull to Improve Cash Flow?

Good news - there are simple ways to improve your cash flow!

Solid spend management can help any business create more efficiency and accuracy in its processes. Using a spend management platform means businesses can see all of their accounts payable in one place - giving them a bird’s eye view of operational cash flow. This can help ensure that a business is spending and managing expenses efficiently. And when those processes are automated, they can be done more easily!

For example, a business that automates its bill payments could eliminate manual data entry - speeding up the timeline and reducing the opportunity for human error. The result? Time that would normally be spent processing invoices or writing checks is saved, freeing up employees to spend more time on higher-level work that moves the business forward.

Plus, some spend management platforms, like Corpay One, allow you to fund ACH and check payments via credit card* - meaning there’s more cash in your bank account available when you need it.

*(2.9% transaction fee applies)

Extending Cash Flow with Direct Methods

How you calculate your cash flow matters when considering the best way to extend your cash flow. Direct Cash Flow accounting methods generate a cash flow statement using a business’s cash transactions from operations. Organizations that use direct methods can try:  

Establishing a business credit line: Sometimes, business owners use their personal credit cards for business expenses, which not only complicates business spending but also poses security risks. Opting for a business credit card instead is less risky, allowing a business to build up good credit while still accessing capital. Plus, some business and corporate cards offer a line of credit. Credit lines can help accommodate fluctuating cash flow or provide a boost through periods of fluctuating demand. For instance, a business could use a credit line to purchase inventory ahead of a busy season (and if that business used the Corpay One Mastercard®, they could even be eligible for a credit line of up to $500k¹).

Paying bills by credit card: Did you know you can pay bills with a credit card? When you automate your bill payments with Corpay One, you can set credit cards as a payment method for bills (even for vendors that don’t usually accept cards!)³. Paying bills with credit means that instead of that payment coming out of your bank account, it’s temporarily postponed to your credit card bill—giving you extra room to use your cash elsewhere.

Cash back: Using a credit card that offers cash back rebates or rewards can put additional cash in your business accounts. The funds you get back from card spending can be re-invested into your business, further contributing to a positive cash flow.

Indirect Cash Flow Methods  

Indirect methods start with a business’s net income and then subtract or add changes in assets and liabilities. When you calculate cash flow indirectly, consider the following in your approach to your cash flow:

Reducing redundancies: Review your business’s assets with redundancies in mind - are there any that aren’t necessary to your operations? Maybe you’re carrying too much inventory, or overhead costs are too high. Automating your bill pay with a spend management platform can help you find redundancies - like identifying duplicate bills, or categorizing spend by category or vendor to see exactly where your cash is going - all while reducing the overhead costs associated with manually processing your accounts payable. Reducing redundancies can help cut down on excess spending, which, in turn, can reflect positively in your cash flow statement.

Reducing inefficiencies: Traditional spend management processes are one place where many businesses experience inefficiency. This could look like:

  • printing, signing and scanning invoices
  • manually entering data into accounting software
  • requiring multiple levels of approval or emailing documents around the office
  • writing and mailing checks manually
  • scrambling to find missing receipts

Using an automated spend management platform can help you eliminate these inefficiencies and minimize the pain points that come with them. Think paying by check online, instantly capturing and uploading documents, or automatically syncing data with QuickBooks or Xero. With the right tools, you can streamline your processes and make your business more efficient - saving you valuable time and money.

Taking the Guesswork Out of Your Cashflow Calculations

Cash flow may seem intimidating, but it’s an important aspect of doing business. And, with the right tools, cash flow can be managed and used to propel a business forward. Incorporating automation within a spend management platform can reduce manual work, automate transactions and help avoid mistakes - all of which can impact your business’s bottom line!

Corpay One is one comprehensive platform that can provide all the tools you need to help make your business more efficient. We're here to help you extend your cash flow through automated bill pay. See what Corpay One can do for you by booking a demo with our team

About Corpay One

Corpay One is a leading spend management solution for scaling businesses. Get one, complete platform to manage your business bills and a credit card (the Corpay One Mastercard®!) to pay them. You can build custom bookkeeping and approval workflows that work for your team, while streamlining payments to your vendors, managing employee spend with custom controls and leveling up your business with a line of credit. This is intelligent spend management designed to help you spend smarter, earn faster and save more. Book a demo to get started with Corpay One today.

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