Are you sitting on a potential Goldmine?
Monday, 5 Sep 2016
Launching a business, project or venture used to be not for the fainthearted, it typically involved asking a few people for large sums of money, with high risk and uncertain reward.
As The Next Big Thing shows, crowdfunding is an innovative way for budding entrepreneurs and start-ups to raise finance, by using the power of the internet and social media to ask a large number of people each for a small amount of money. Since traditional lending tightened in the aftermath of the banking crisis, donation, debt and equity crowdfunding sites have mushroomed as a means of getting fledgling businesses off the ground.
For established companies and big brands, though, it might seem a little cheeky to approach the market cap-in-hand. And if your business makes, say, components for sewage treatment plants, rather than cool tech, you’ll probably struggle to persuade individuals to dip into their own pockets to help you grow. However, it’s far more likely that you’re sitting on a seam of cash trapped within your business which, like natural gas in the North Sea, could be used to fuel your company’s growth. Instead of a drilling rig, there are various tools you can use to optimize working capital and liberate cash for your Next Big Thing.
Improve spend visibility – lacking an accurate picture of your cash position severelyrestricts your ability to make decisions, especially when planning for big-ticket investments. Spend analytics can help you see pending liabilities and decide exactly when to release cash.
Collect money earlier – this may sound obvious, but the sooner you get invoices in front of customers, the sooner you can get paid. E-invoicing can dramatically accelerate cash flow as well as reduce administrative costs.
Gain early payment discounts – eight out of ten vendors would readily exchange a discount for an early payment. Paying early not only generates bottom line savings but also improves supplier relationships, further strengthening your negotiating power.
Explore alternative financing – financing payables or receivables to boost working capital performance is now easier than ever thanks to e-commerce networks, with options including reverse factoring, dynamic discounting and e-payments.
There’s plenty of precedent. For example, Centrica had a somewhat fragmented procurement landscape and was looking to more actively manage working capital. The company realised that by addressing its P2P cycle time, it could maximise the opportunities brought about by supply chain financing. Similarly, Schneider Electronic has automated its P2P workflows to more sustainably manage critical supplier relationships and open up the potential for dynamic discounting. So rather than automatically looking outward for sources of investment, it pays to revisit your internal processes and supply chain to release the cash already locked in your business. It may not sound as exciting as crowdfunding, but it could be the equivalent of finding a small fortune down the back of your sofa.