A Small Business Guide for Cash Flow Management with Tools for Unlocking Growth from Thomas Priore

Cash flow is one of the most essential elements of running a small business. Even for the most profitable enterprises, it can be the difference between surviving and thriving. The good news, says Priority Chairman and CEO Thomas Priore, is that there are many ways to use technology to manage your cash flow and make it one of your small business’s greatest assets in the digital era.

“Small businesses are scrappy. There’s a reason why they’re over 50% of the GDP in the US. They’re the strength of our economy,” says Priore. “But as resilient as they are, there are uncertainties out there – inflation, interest rate pressure, and the growing debt burden on consumers. All of this affects small businesses.”

Cash flow is quite simply the money passing in and out of your business – funds from sales and invoice payments are your inflows, while wage, rent, and all other expenses are your outflows. The goal of any small business should be not only to maintain a steady cash flow so that they can cover debts and overhead costs but also to track, optimize and forecast the amount of money flowing in and out of their business, says Priore.

In the past, the only option for tracking and accounting for sales and business expenses for small business owners was to keep a written ledger. Then came spreadsheet software and, eventually, business applications. Now there are a host of online and digital portals that help business owners manage and report on their finances. Most solutions today provide the fundamentals: recording business transactions and creating invoices so business owners can see where and how their money flows in and out. Companies lucky enough to have banking and financial institutions integrated with these portals have more connection to their accounts and real-time views of the business’s financial health – tracking inflows and outflows as they happen rather than through historical data. “To get a better sense of financial health – and to better plan for the future – small businesses should aim to utilize tools that help with budgeting and forecasting cash flow,” says Thomas Priore.

But Priore says small businesses need to think about automation and solutions embedded into their business management software to capitalize on the latest innovations in digital cash flow management systems, which will help unlock the full potential of this resource.

The Significance of Cash Flow Management for Small Businesses

Priore adds, “The cash available on hand tells the story of your company’s past, present, and future through the funds in your accounts. When you understand and can manage your cash flow, you’re in a better position to make strategic, long-term decisions for your business, whether deciding to hire more staff or where and when to expand.”

Another way that cash flow management helps small businesses is it assists them in cultivating their business relationships, like who are their biggest suppliers and taking notice of their customer’s preferences. Such information helps small businesses have a clearer picture of supply and demand sources, so they can focus their efforts on business activities, services, and even their products in the areas that will yield the highest growth potential.

For instance, many businesses are seasonal (think landscaping, tourism, and holiday retail). Managing overhead costs during slower months and understanding when to ramp up for peak months is often a relied-upon resource to help seasonal businesses measure and plan for success. “It’s one thing to have a hunch that you’ll have fewer inflows at certain times of the year,” shares Thomas Priore, “but it’s another thing entirely to be able to forecast how those inflows might look in reality. With a sophisticated cash flow solution connected to your other business management platforms, you have actionable information to plan and manage all aspects of your business, including staffing, resources, and expenses. Additionally, these systems will provide the information needed from cash flow forecasts to secure additional financing from lenders and investors, if that is the desire of the owner or management team.”

Leveraging Technology for Cash Flow Management in Small Businesses

Priore says, “The role of technology in cash flow management for small businesses has accelerated dramatically over the past few years and will continue to do so for the foreseeable future.”

The COVID pandemic accelerated the adoption of technology by small businesses to expedite payment resolution because owners needed to know what was coming in to help acquire supplies as supply chain delay times extended. Now, business and enterprise technology providers wanting to stay current are focused on adding embedded payments to their platforms to help businesses better manage themselves as a part of the need for adaptation and to meet the needs of the customers they serve.

Priore explains that embedded payments for small businesses is helpful for the customer and business user experience, but there is another layer that many have yet to uncover, which is recognizing that their ecosystems can go further to help them reach the next level with payments and banking solutions. “Maybe you’re a hair salon that wants to resolve payments to suppliers by accelerating the receipt of cash. Or you’re a restaurant with multiple locations, and you want to use modern payment solutions to give every one of your servers an account with a debit card so that you can automatically pay them their tips and wages rather than paying them by cash or a check that they’ll need to cash with a payday lender,” says Thomas Priore. “Those are unique offerings and opportunities inside your system that will benefit from having modern payment tools and upgrading the commerce experience.”

“Our customers in construction are using embedded cash flow and payments technology to upload their invoices and manage liens, which are natural impediments to payments. Digitizing the process of invoice presentment helps speed funds disbursement, which keeps folks working on the site, because they’re getting paid fast,” Priority’s Thomas Priore explains. “Managing liens digitally reduces the business’s carrying cost on the back end because they’re not paying for money that’s sitting around that they had to borrow to keep the construction project moving.”

The future of cash flow management is bright for small businesses

Smart small businesses in many sectors are leveraging technology and data for precise cash flow management. By using real-time reporting systems, they have a better view of their financial health. By automating payments, they use their cash more efficiently. And, by forecasting and analyzing cash flow data, they can make better business decisions.

For small businesses, Thomas Priore sees their bright future and believes that unified commerce (or the combination of payments and banking) is the ultimate cash flow management solution in the digital era. “When banking and payments services are combined into one platform, like Priority’s Passport solution, it provides business owners with the optimal tools, resources, and solutions to run and scale their business for what’s to come. Modernizing the unified commerce experience for small businesses is going to happen at an accelerated pace and Priority is leading the way,” says Priore.