In the fast-paced world of eCommerce, especially for B2B businesses, managing cash flow is essential to ensure long-term sustainability. Cash flow issues can hamper growth, making it vital for merchants to adopt effective strategies to maintain a steady flow of funds.
In this guide, we’ll explore why cash flow is crucial for B2B eCommerce, common challenges faced by merchants, and how automating processes through ERP solutions can provide a seamless experience for managing your business.
Why is Cash Flow Important for eCommerce Merchants?
Cash flow, in simple terms, refers to the inflow and outflow of money within your business. Positive cash flow ensures you have enough funds to cover operational expenses, pay suppliers, and invest in growth opportunities.
In the B2B space, where larger transactions and extended payment terms are common, a healthy cash flow is crucial. A business can be profitable on paper, but without effective cash flow management, it may struggle to meet its obligations.
According to a study by ASIC, poor cash flow accounts for 40% of business failures in Australia. Ensuring a smooth flow of cash allows eCommerce merchants to fulfil orders, keep suppliers happy, and invest in marketing or product development.
What Is a Good Cash Flow?
A good cash flow means having more money flowing into the business than out. While profitability is important, businesses must also ensure liquidity—the availability of cash to pay bills, suppliers, and wages.
In B2B eCommerce, maintaining a good cash flow is often more complex due to bulk orders, delayed payments, and long credit terms, but it can be achieved by streamlining payment cycles, cutting down on operational costs, and ensuring faster invoice processing.
Challenges of Cash Flow Management in eCommerce B2B
Managing cash flow in eCommerce B2B comes with a unique set of challenges:
1. Delayed Payments
In 2023, 47% of the total value of B2B sales on credit in Australia remained unpaid by the due date. The average payment terms for Australian companies were extended to 35 days, meaning that payments often take more than a month to come through. This results in liquidity crunches, making it difficult for businesses to manage day-to-day expenses.
2. High Inventory Costs
Many B2B businesses in Australia are forced to hold large amounts of stock to meet the demands of bulk orders, tying up significant capital. This inventory management challenge can limit the liquidity available to cover operational costs. Additionally, managing and forecasting inventory levels is crucial, as unsold stock can lead to further cash flow issues.
3. Shipping and Logistics Costs
Australian eCommerce businesses, particularly those dealing with international clients, face high logistics costs. The Australia Post eCommerce Report highlights the increasing impact of shipping fees on businesses, especially those navigating international shipping routes. These costs can heavily impact cash flow when combined with extended payment terms.
4. Currency Fluctuations
B2B eCommerce businesses dealing with foreign clients face additional cash flow challenges due to exchange rate volatility. Research shows that 42% of businesses report foreign exchange fees between 0.25% and 1% on cross-border transactions, which can erode profit margins and further complicate financial planning.
How to Manage Cash Flow in Your B2B Business
Here’s how you can manage cash flow in your B2B business:
- Negotiate Better Payment Terms: Work with suppliers to extend payment terms, allowing more time to hold onto cash while ensuring you can meet fulfilment demands. Similarly, offer clients early payment discounts, which can incentivise faster payments and improve cash liquidity.
- Reduce Unnecessary Expenses: Conduct regular audits of operational costs to eliminate unnecessary spending. This keeps more cash available for critical expenses like maintaining stock levels and covering payroll.
- Automate Invoicing Processes: Streamline invoicing by automating it through an ERP. Prompt invoicing, coupled with automated reminders, speeds up payments and reduces time spent chasing overdue invoices.
- Use Real-Time Inventory Data: Leverage ERP systems like MYOB Acumatica to monitor inventory in real-time. This prevents overstocking, freeing up cash that would otherwise be tied up in unsold goods.
- Utilise Cash Flow Forecasting Tools: With forecasting tools built into ERPs, businesses can better anticipate future cash needs and identify periods of surplus or deficit. This aids in making informed decisions about investment and resource allocation.
Automate Cash Flow Management Processes Using Technology
Integrating your eCommerce storefront with an ERP like MYOB Acumatica allows you to streamline and automate cash flow management across multiple business functions. With MYOB Acumatica, you can connect your Shopify or BigCommerce platform for a complete eCommerce ERP solution, helping you move into online sales or get the most out of your existing online store.
This integration offers powerful automation features, ensuring seamless operations that reduce manual tasks and optimise cash flow management across your business.
Below are the key ways automation can help optimise your cash flow processes:
Automated Order Syncing
Orders placed on your online store are automatically synced with MYOB Acumatica in real-time. This eliminates the need for manual data entry, reducing the risk of errors and saving time.
Real-Time Inventory Updates
Inventory levels are synced between your ERP and online store, ensuring that product availability is always up to date. This prevents overselling and allows for better cash flow forecasting by maintaining accurate stock levels.
Automated Payment Reconciliation
Payments made through your online store are automatically reconciled with MYOB Acumatica. This saves time, improves accuracy, and ensures that your financial records are always up to date.
Multi-Warehouse Integration
With MYOB Acumatica, you can manage inventory across multiple warehouses. This gives you the flexibility to allocate stock efficiently, helping to optimise working capital by reducing excess inventory.
Real-Time Data Synchronisation
Customer details, shipment information, and sales data are synchronised in real-time. This provides a complete and accurate view of your business’s cash flow, enabling better decision-making and quicker financial reporting.
Customisable Synchronisation Options
For data that doesn’t require real-time syncing, MYOB Acumatica allows you to set scheduled or manual synchronisations. This gives you control over the timing of data transfers, enabling better resource management.
Conclusion
Cash flow management in a B2B eCommerce environment is crucial for maintaining operational efficiency and driving business growth. By automating key processes such as order syncing, inventory management, and payment reconciliation, you can significantly improve your cash flow management and reduce the risk of errors.
An integrated ERP solution like MYOB Acumatica not only simplifies these operations but also provides real-time insights, helping you make better decisions and optimise resources.
Investing in a business management platform that seamlessly connects with your eCommerce platform can elevate your business, ensuring you get the most out of your online store while streamlining backend operations. This automation will save you time, enhance customer satisfaction, and ultimately improve your financial health.
Ready to take your cash flow management to the next level? Book a demo with our expert MYOB Acumatica consultants at AlphaBiz Solutions and discover how we can help transform your eCommerce operations.
