One reality of manufacturing is the focus on margins and metrics. Whether you’re measuring operational equipment effectiveness, repeatability or inventory loss, the quest to save costs and maximize efficiency never ends.
For all the scrutiny that the production floor and logistics receives, it’s easy to overlook the unique back-office struggles that are common to manufacturing-based businesses. As a manufacturer, keeping cash flow in balance is an ongoing challenge.
Here’s a look at the top challenges:
Giving customers leeway with invoice payments is seen as a sign of goodwill, especially when many industries are struggling to get by during COVID-19. Even so, it’s more important than ever to be vigilant for signs of trouble and respond accordingly.
Investing in new equipment might have made excellent business sense on paper 12, 24 or 48 months ago. But when economic conditions change, that can leave you struggling with fluctuating demand. That puts even more pressure on your cash, making it difficult to meet requirements for loans and leases on machinery, equipment and facilities.
Accounts receivable is one of your most valuable assets. When the billing cycle stretches out into 30, 60 or 90 days, that diminishes the value of the company’s earnings.
In the manufacturing space, access to credit is critical. A revolving line of credit covers inventory, labor, facility costs and more, so the goods can roll off the line and into the semi-trailers … and so your company can get paid. However, when an antiquated cash management system is also slowing access to funds, you’re undermining your profits.
Bottom line, waiting for payment means having less money to earn interest and investment income.
The first step in increasing cash flow is processing payments more quickly, especially when many accounts still pay with paper checks. When you add up all the steps — mail delivery, receiving, dropping off the checks at the bank, check float — paper checks extend your already stretched-out billing cycles. Increase your access to funds with cash management tools available at your community bank.
Either tool will export the data right into your accounting software. Not only would you get access to funds more quickly, but you would also spend less time on labor-intensive data entry and reconciling.
Set up a meeting with the cash management team at Minnwest Bank. We’ll talk about your business needs and goals so you’ll have access to financial tools to help you become a master of cash flow, capture more cash and optimize your back-office processes.
This cash management tool offered by Minnwest Bank lets you manage every facet of the company’s finances. Each team member with financial responsibility can use business online banking to manage transactions and gain oversight of the finances. Business online banking gives you access to things like:
Increase oversight and give financial leaders and owners the tools to monitor the liquidity of their business in a single place.