Finance
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SMEs Still Struggle but there is a SolutionThough the Nation Bureau of Economic Research declared the recession over in 2009, many SMEs would beg to differ. Since the crash of 2007, SMEs have been struggling to recover due to their inability to obtain bank financiing and their typical lack of pricing power in the markets in which they compete prevent them from passing their costs on to customers. An article in today’s Wall Street Journal titled “For Small Businesses, Recession Isn’t Over” drives home that point. In the US, SMEs are treading water: they’re not hiring, few are making capital investments and their business sentiment has been “flat lined” for the 4th year in a row. In spite of official pronouncements, many believe we’re still in a recession—regardless of what government statistics say about positive GDP. The data presented in the article underscores the point, the only industries that are in expansion mode are Educational Services and Health Care. This isn’t just confined to the US. In Germany, the Mittelstand (the small business sector that dominates their economy) enjoys fairly decent economic conditions but a recent reading of the Euro Zone manufacturing index is flashing caution signs.
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What SMEs Can Do to Streamline Customer BillingThis blog is part of my series on streamlining finance processes. I previously wrote about the procure-to-pay process (see link), specifically the supplier invoicing component, how it consumes a great deal of the accounting staff’s time and what companies can do about it. On the other side of the cash conversion cycle, the order-to-cash process, namely its more accounting ? focused component customer billing, is equally fraught with paper-based processes, time-consuming information checking and manual re-keying of data. However, the accounts receivable cycle is arguably more critical because of its impact on days sales outstanding (DSO), cash flow and liquidity. The reason is one of control. In the AP cycle, we have more control in that we can always delay vendor payments to stretch our cash. But since one company’s payable is another’s receivable, if a customer were to do that to us, we could experience a cash crunch. (more…)
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Supplier Invoicing-What SMEs Can Do to Reduce Workload and ErrorsMany would agree that the accounts payable process is paper intensive and laborious. In most companies, particularly SMBs, supplier invoices are forwarded to the accounting staff from all over the company for payment. They key the invoice data into their accounting software and then it’s up to them to figure out if the goods or services have been received and the payment is authorized. Depending on how long it takes to verify the invoice, the company could end up paying the vendor late and missing a possible discount for early payment.
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