Order Management Software Makes it Easier to Avoid a Cash Flow Crisis

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Order Management Software Makes it Easier to Avoid a Cash Flow Crisis

Order Management Software Makes it Easier to Avoid a Cash Flow Crisis

Investors pour over profit-and-loss statements and balance sheets to get a handle on the overall profitability of a business, but managers who are responsible for day-to-day operations know that businesses live and die according to cash flow. Inadequate cash reserves, even for a short time, can increase costs and erode profitability and limit a business’s growth prospects.

Historically, accountants and financial managers have developed numerous ways to respond to a cash flow crisis. The most common techniques include keeping books and records current to give managers a better picture of money flow through a business, maintaining credit lines and other facilities that can provide quick cash infusions, accelerating customer payments, paring near-term expenses, liquidating non-productive assets, and negotiating better payment terms with vendors. None of these techniques eliminate the potential for a crisis, but instead only give businesses options for what to do when a crisis occurs.

Tools of the Trade: Order Management Software

order management software computer with software

Production managers know that cash flow problems can be caused by poor bookkeeping, unpaid invoices and other bad debts, credit mismatches between accounts payable and receivable, overheated and uncontrolled growth, and bad forecasting. Those managers might not have much control over a business’s financial or strategic operations, which reduces a production manager’s main contribution to cash flow improvements to making good forecasts and controlling production in line with those forecasts. The ultimate goal for the production manager is therefore to prevent a cash flow problem from maturing into a full-blown crisis. Order management software is a tool of choice for this purpose.

Raw material inventory and product manufacturing occur within the greater supply chain that every enterprise must harness to maximize its cash flow. Managers cannot control every aspect of a supply chain, but order management software gives them an opportunity to see everything that affects production (and, by extension, cash flow) in one central system. The software gives them information on:

Raw material and finished goods inventory levels throughout the business, including in stores, warehouses, and at drop-ship facilities;

Complete details on finished goods, including specific product attributes and locations;
Order and delivery due dates;
Order selection from warehouses, plus picking, packing, and shipping details;
Payment due dates;
Customer information; and
Historical sales data.

Without order management software, this information will typically be available from different sources, and with no centralized coordination or interaction. The software puts its all into one system to save production managers time and effort and to give them a greater opportunity to make forecasts that are based on objective criteria.

Incorporating Order Management Software With ERP Systems

Sales-Order-Process-Management-in-ERP

Order management software that is incorporated into a company-wide enterprise resource planning (ERP) system extends cash flow management across the entire enterprise. At an executive level, cash flow forecasting problems are most often a function of one or more of data inaccuracies, systems and processes that are not defined or documented properly, interdepartmental conflicts regarding cash flow estimates, multiple different software systems that deliver inconsistent data and information, and data that is either too granular or too smoothed out. As these problems trickle down to a production manager’s level within an organization, they become exacerbated by poor communication between departments and different levels.

ERP order management software removes the bulk of these problems by getting the entire organization at all levels and throughout all departments on the same page and with all the same information and data. Organizations with large mobile workforces can gain an even greater benefit with cloud-based ERP system that facilitate easier and more secure logins and access to data by employees who use mobile devices in the field. Cash flow problems might never disappear entirely, but order management software can make them more controllable while preventing them from flowering into crisis-level issues.

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About The Author
Harry Carver
Harry Carver is TheHTS resident science nerd and super gamer. As well as researching and learning about physics and chemistry, he enjoys playing the mad scientist in his home lab so be sure to watch for his chemistry and science videos here and on our YouTube channel. He has a dislike for social media, but you can find him on Linkedin should you want to know more.

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