Sachin Sharma, founder of ProcureDesk, walks through five procurement mistakes that drain cash: paying invoices too soon, billing customers late, catching budget overruns too late, duplicate invoice payments, and missing early-payment discounts. He shows how to fix each with consolidated dashboards, automated order-to-cash, budget controls, and faster invoice processing.
If you are CFO of a growing company and struggling with cash flow management, this video is for you. We recently surveyed around 50 companies to understand how they manage their cash flow, how effective is their cash flow management process. And we kept on hearing the same thing again and again. It's like it looks good on paper, but we are always struggling and we don't know why. And when we dug deeper, we found these five different areas on why they're struggling. So in this video, I'm going to cover what those five areas are and, and what you can do to avoid them and have better cash flow planning. If you're joining for the first time, welcome. My name is Sachin. I am the founder of procuredesk, where we help growing companies better manage their cash flow and automate processes around procurement. Let's jump right in. Number one is they are paying invoices too soon. What do I mean by that? They have a cadence of paying invoices every week, so the team doesn't want the backlog to build up. So every week they're processing invoices and paying it. So what that means is they are might be paying invoices too soon because, you know, invoice came in, I just want to pay it now. And granted, you know, they might be paying some late too as well as it happens because the processing doesn't happen on time. So a good way to solve and ensure that you're not paying invoices too soon is one, don't pay them every week. You can pay every 15 days. So what you need to kind of have better visibility from a cash flow standpoint is one dashboard that tells you everything, everything that is in the queue, whether it's approved, whether it's pending approval, what are the different payment terms which you have negotiated with the vendor and based on the payment terms, what is the schedule and then you can decide your payment frequency to make sure you're not paying them too soon. Right. So that's number one. Number two is you're billing your customers late. Happens a lot in construction companies where you have billable expenses. So you have expenses that are billed from the vendors and you take that and the ability of customers, then you run your customer's page, you're going to pay your vendors and so on. That whole cycle slows down if your invoice processing is slow. So if your invoices are not coming on time or the vendors are not invoicing on time, or vendors are invoicing and you're not getting it for whatever reason, if invoices are not coming in on time, you are billing your customers late. That is different revenue and impact your cash flow. So an easy way to fix that would be to implement a system that implements or automates the whole order to cash cycle so you have visibility from end to end on where things stand. Number three is they're catching budget overruns too late. One of the reason why you have cash flow issues is you haven't planned for that, right? So you have probably a budget forecast and based on that you're planning your cash flow. But now all of a sudden, you know, let's say you are a biotech company and somebody purchased a large equipment, maybe $100,000 that you were not planning on. Now you have a cash flow issue. So the best way to kind of manage that is being proactive around your budget management. And proactive would be having a system that captures the budget and the requisition checks. Do you have the money before you actually make the purchase? And if you don't stop it right there. Right. That's a kind of easy fix for that. Number four is they are paying the same invoice twice. Now it might not happen in your company, but we see this very often that companies have duplicate payments being sent out. And typically the problem is when you do not have a three way max process because you might be approving the same invoice with a slightly different number, maybe one at the end or a at the end without realizing that it's a duplicate invoice. So the fix for this is to make sure that you have invoice that is matched to your purchase order and you have an exception management process that if the invoice is coming twice, somebody's looking at it and saying why there's a duplicate. Or you have a system like Procare Desk that can automatically capture those duplicate invoices for you so that it doesn't even go into your queue. So that's number four. Number five is you're missing early payment discount. Now this only matters if you're able to process your invoices soon, right? Or on time. Most of the vendors will offer you 2% net 30 or net 10, right? So if you have net 30 terms, if you pay them within 10 days, you can take off 2% of the invoice. Now it might not sound too large, right? But if you, let's say taking a million dollar in spend, that's around $20,000 and if you have like 5 million, that's around 100,000. If you really are able to do all that, right? So what it matters is, you know, one, you should have the cash flow to kind of pay the vendors if you can pay them early. But two is you need a system or a process that allows you to process the invoice within 10 days and pay the vendor. And most of the companies have manual processes because of which they are not able to pay on time. Forget about paying early. So that's a advanced strategy, especially if you have done the first four. You can do this to kind of get early payment discounts. So if you're struggling with cash flow management, these are the five things you should avoid, right? Don't pay invoices too soon. Make sure you have a budget check in process. Number three is you are billing customers on time, don't bill them late. Right? Number four is don't pay duplicate payments. And number five is take avail early payment discounts wherever you can. So thanks for joining me today on this call. If you are struggling with managing your cash flow, click on the link below to talk to one of our product specialists to see if Procares can help you with better cash flow management. Thanks and I'll see you again.
