Cash is King - and So is Your Supply Chain

For companies of all sizes and across all industries, cash is not only crucial - it’s king.

Businesses must carefully manage the flow of their cash - making sure that payments aren’t going out faster than resources are coming in - simply to survive.

According to a recent study by Dun & Bradstreet on business failures, companies that do monthly cash flow planning have an 80 percent survival rate - more than double the 36 percent survival rate for those only planning once a year.

This discrepancy is partially because careful planning helps your company build up a solid cash reserve, and that reserve can serve as a life vest when there are weather disruptions, economic downturns or other unexpected obstacles.

A strong cash position isn’t just good for the bad times either; indeed, that same cushion can be used as investment capital - for starting new projects, upgrading equipment or bringing on new hires - when the economy is on an upswing and business is growing. Plus, well-managed cash can provide access to even more capital via financing, as higher free cash flow generally results in a lower rate of borrowing.

But while cash is important for all businesses, cash flow management is especially vital for mid-market companies in today’s economic landscape.

Because of their size, mid-market companies have a smaller financial war chest than their larger competitors, which means they have a reduced margin of error for the timing of inflows and outflows, a thinner cushion for tough financial situations and a smaller investment pool (including less access to capital) for financing growth.

As a result, it can take more effort and precision for mid-market companies to remain in a strong cash position. The good news, though, is that every small improvement in cash flow has an even bigger impact on your business.

And even more good news: Advances in technology and software can help your company automate supply chain processes, which has made managing cash flow easier than ever.