How To Adjust The Levers That Impact Cash Flow

Centime founder and CEO BC Krishna sat down with Don Apgar, director of merchant services advisory practice at Mercator Advisory Group for a podcast with Payments Journal. Krishna and Apgar discussed just how common cash flow problems are for businesses — and why solving them traditionally has been complex and difficult.

Don Apgar, director of the merchant services advisory practice at Mercator Advisory Group, which generates independent research and analysis on the payments industry, recently recorded a podcast with Centime CEO and founder BC Krishna for the Payments Journal Podcast.

Payments Journal Editor in Chief and podcast host Ryan McEndarfer opened the session by noting, “With liquidity being sucked out of the economy, businesses of all sizes are going to need to pay a lot of attention to cash flow. But how? How can businesses pay better attention when in many instances accounts payable and accounts receivable departments either don’t have access to the same data or don’t have the same insight as the other has? 

“Well, we do live in the 21st century after all, and with this explosion of data transparency, there are modern tools to help with this cash flow insight problem.” Over the course of the following 25 minutes, and along with McEndarfer, Apgar and Krishna explored the nature and scale of small and mdi-sized businesses’ cash flow challenges — and why they have been so complex to solve until recently.

Citing research from the JP Morgan Institute on the precarity of businesses’ cash positions, Krishna noted that “Even small things can be disruptive [to cash flow]. Could be a single customer that pays late, it could be seasonality, or heaven forbid, a recession or a pandemic.” Their cash buffer and runway tend to be so limited that an unforeseen mismatch between inflows and outflows, or a cash flow gap, could result in seriously detrimental outcomes for a business. “Businesses often just focus on growth and profitability, which are all important metrics to look at,” he continued. “But as they say, cash is the lifeblood of the company, and cash flow is something that businesses need to understand, manage and control.” 

Apgar concurred, adding: “I don’t think a lot of folks realize just how thinly many businesses operate, and I think the pandemic brought a lot of this to light. The businesses that didn’t make it didn’t hang on too long. So it’s really a challenge, and it’s interesting to see what kind of tools businesses have available to try to give themselves a little more buffer.”

With the expiration of the federal government’s Paycheck Protection Program (PPP), which cushioned cash flow gaps for so many, businesses once again must find ways to gain control of cash flow — with refreshed understanding of the importance of owning their cash.

Listen to the full podcast and read the accompanying article, “Strategic cash flow forecasting for SMBs,” here to learn about the methods and technology available to businesses.

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