While business success is not only about finances, good financial decisions are the key to ensuring the business’s upward growth trend.
As cash flow is one of the top reasons for business failure, it is very important to understand how it contributes to the business and how advanced technologies like business intelligence tools can help keep them under control.
The best way to keep track of cash flows and manage them efficiently is by leveraging cash flow analysis. It is a key financial reporting tool that looks at your company’s cash inflows and outflows over a certain period so you can see the cash inflow and outflow areas to make the necessary plans.
A cash flow analysis can help business owners better control financial performance by analyzing operating costs, evaluating debt, and identifying growth opportunities.
Traditional Approach To Cash Flow Analysis
Most accounting teams are in charge of conducting a cash flow analysis at the conclusion of each quarter to ensure that all of the company’s expenses are taken into account.
Even if your business is profitable, uncollected receivables could cause you to experience financial difficulties. Free Cash Flow is one of the most helpful financial performance indicators (FCF).
Analysts look at FCF, which is operating cash flow minus capital expenditures, to determine how much cash a company has available for business growth or shareholder returns.
The most efficient method for this is a cash flow statement. Most businesses still use the traditional MS Excel approach to compile the statement, which involves gathering a large amount of data from various sources.
However, it requires a large number of resources and is time-consuming. Additionally, it can lead to data accuracy and report standardization issues, which you shouldn’t have to worry about when managing your finances.
Benefits Of BI For Cash Flow Analysis
Recognizing the challenges with the traditional approach, businesses are increasingly adopting business intelligence platforms to make the process easier.
A business intelligence platform like BFM helps businesses automate their cash flow analysis and make it easier to consolidate financial data, thus simplifying the cash flow planning and forecasting process.
Here are some of the top benefits of business intelligence tools for businesses in managing their cash flows.
Financial forecasts help you plan for resource allocation and budgeting while providing a clear path to achieving your business goals. With a business intelligence platform, the cash flow forecasts can be generated automatically.
Financial managers can stay informed at all times and receive early warning of a cash surplus or shortage, thanks to its capability.
The most time-consuming aspect of performing a cash flow analysis using a spreadsheet is gathering information from various sources.
A business intelligence program that integrates with your existing Tally account can help your business get the information required in real-time and make it more insightful.
Better Inventory Spending
Inventory has some hidden costs associated with it. Apart from the cash tied in stock, instances of overstocked inventory can also lead to cash flow issues.
With the help of business intelligence platforms, you can carefully plan your inventory purchases and balance supply and demand.
Is it time for your business to invest in a new opportunity? Or should you reduce your expenses? Business intelligence platforms are reliable tools for managing risks. An effective business intelligence platform can help you determine whether you have enough cash based on your cash flow forecast.
With a lot of BI platforms cropping up in recent years, businesses often can’t decide as to which one is best for their business. The right business intelligence platform can help you manage your cash flows efficiently while also helping with other finance functions.
BFM is a leading business intelligence platform in India that provides organizations with useful cash flow and other financial insights that help them grow their business. If you want to know how BFM can help your business, visit www.zikzuk.com to request for a free demo today!