In the UK, about 60% of retailers struggle with cash flow management, with about 30% saying that they have had trouble paying their employees and suppliers on time.
Problems like this are very common in the retail industry due to issues like intense competition, changing customer demands and the need to manage supply chains and inventory properly. Also, with e-commerce taking over, many retailers are now pressured to take up new technologies that can help them manage their cash flow better.
When a retail business doesn’t have a good grip on its cash flow, it may start making losses and become less profitable over time—this could lead to the retail business going under.
Fortunately, there is a light at the end of the tunnel—cash flow management systems. Also called cash flow management software, this innovative solution is designed for businesses, like those in the retail industry, to manage their cash flow more efficiently and effectively.
Studies have shown that businesses that use cash flow management software are 15% more profitable than those that don’t. So let’s explore how good cash flow management software can help retail businesses become more profitable.
How can a cash flow management system boost profitability?
Here’s how cash flow management software may help retail businesses boost their profitability:
Streamlined financial operations
82% of businesses tend to fail due to poor cash management. Many of these failures may be due to human error during the cash flow management process.
Also, there are many manual tasks retail staff have to perform, and sometimes these tasks may become more convoluted as the business progresses, making it easy to make mistakes. This software can greatly help reduce human errors and save the business from spending time and money on damage control.
Additionally, cash flow management systems can automate daily financial tasks, such as payment processing, invoicing, and expense tracking. This can help free more time on a retail employee’s plate so that they can focus on more complex tasks, like concocting business development strategies to increase profitability.
Enhanced financial health
With the help of a cash flow management system, retailers can efficiently keep a close eye on their financial health. The software allows retailers to monitor potential cash flow gaps and give insights into which areas can be improved.
This way, retailers can make changes to their financial strategies, optimise their cash flow in the long run, and boost their profitability too.
Improved forecasting
Accurate forecasting is very important for retailers as it helps them make more informed decisions, control their stocks more effectively, and set their product pricing for maximum profitability. The software will make this process easier by providing real-time analytics and financial reports to help retailers make more data-driven decisions.
Reduced late payments
24% of businesses in the UK have reported late payments as a major threat to their integrity. By using cash flow management software, retailers can create automated payment reminders, receive reports on outstanding invoices, and track payments.
Better inventory management
For retailers, inventory can directly impact their cash flow. For instance, poor inventory could lead to retailers having more stocks for a particular product than they need. This would mean they’ve spent more money than they should have for this product and they’re now incurring extra overhead costs to store the products—this can lead to higher expenses and reduced profits.
On the flip side, if a retailer doesn’t have enough of a product that’s selling well, they could miss out on potential profits.
With cash flow management software, retailers can have more control over their stocks by allowing them to optimise their stock levels, reduce overstocking, and decrease stockouts.
Secured supplier relationships
A good relationship with a supplier is crucial for any retailer; however, issues like late payments can lead to suppliers parting ways with retailers.
To avoid situations like this and improve supplier/retailer relationships, cash flow management software automates the payment process, provides detailed reports on any outstanding invoices, and helps retailers track payment schedules.
Improved compliance with financial regulations
When a retailer, especially a well-known one, faces legal penalties, it could be devastating to their reputation and could lead to them losing customers, market shares, and suppliers.
Cash flow management software can help retailers stay compliant with financial regulations by offering organised and accurate financial reports which can reduce the chances of the retailer getting penalties.
Also, the software can help retailers identify potential financial risks. This information can help the retailer come up with effective strategies to mitigate risks and maintain their financial stability while keeping their reputation from being tarnished.
Access a reliable cash flow management system for your retail business
Cash flow management software has become a necessity for retail businesses in the UK and the world. With this software, retail businesses can track their money, predict future outcomes, and avoid financial penalties.
At WITMEG, we offer a powerful all-in-one EPOS software solution for retail businesses that also comes with cash flow management software. Get in touch with us to learn more about our innovative retail EPOS suite today.
FAQs
Can EPOS systems speed up retail sales?
Yes, EPOS systems can make checkouts and payment processing faster, allowing for increased revenue and enhanced cash flow.
Can EPOS systems integrate with my retail business’s existing software?
Yes, modern EPOS systems are designed to be integrated with software tools such as accounting tools.
Can cash flow management software help enhance customer relationship management?
Not directly, but cash flow management software can automate a lot of manual tasks, giving retail employees more time to focus on customer service activities.