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Every business needs to practice real-time data analytics to thrive in the modern market. But real-time data analytics can also help in a specific way: cash flow management. Let’s break down how real-time data analytics can affect your growth and how to use it to improve cash flow management across the board.

How does real-time data analytics affect the growth of small businesses?

Real-time data analytics affects the growth of small businesses by influencing decisions.

When you look at the data from key performance indicators (KPIs) your business takes in – such as revenue and customer growth – you make decisions based on that information. If revenue and customer growth are both up, you might consider expanding or splurging on another marketing campaign. If those KPIs are down, you might consider tapering your spending and rethink your marketing approach.

Therefore, real-time data analytics impacts whether your business grows, stalls, or slows down based on its current cash situation, brand reputation, and other attributes.

At Byline, we take the time to get to know your business. Whether you’d like to improve cash flow, expand operations or update equipment, our team can customize financing and treasury solutions to help. Get in touch.

How to improve cash flow management with real-time data analytics

Many small business owners want to use real-time data analytics to improve their decisions regarding cash flow and expenditures. Fortunately, there are lots of ways to improve your cash flow management practices by leveraging the data you collect in real-time.

Method 1: Identify and reduce variable expenses

You can use real-time data analytics software and platforms to identify and reduce any variable expenses. Your variable expenses are the things your business doesn’t have to purchase, at least in the short term. You need to determine whether the expenses your business incurs are variable or not.

For example, one of the effects of inflation on small businesses has been a rise in materials costs. Identifying which materials are a variable expense can help you save some cash when your budget needs as much wiggle room as possible, like during a recession.

Then, once your cash flow improves, you can exercise your cash will management skills again and return to spending money on variable expenses for expansion, staff training, etc.

Method 2: Optimize your inventory

Similarly, real-time data analytics gives you greater insight and understanding into your inventory situation. With the right analytics plan and software, you can optimize your inventory by:

  • Reduce inventory sitting in your warehouse, not on store shelves or making you money
  • Reduce wasted time and money on subpar shipping arrangements
  • Improving order accuracy, so your inventory management team only orders what your customers really need or want

In the long run, this will help your budget and customer expectations. Your customers won’t order something only to discover that you are actually out of stock of that item with good inventory management.

Method 3: Take greater control of accounts receivable

When times are tough, such as during inflation, you may need to take greater control over your accounts receivables. Real-time data analytics can help you predict how many materials you’ll need, enabling you to make smarter purchasing decisions when money is tight during periods of inflation.

Method 4: Manage existing backorders

Armed with real-time data, you can enact a cash flow management plan that lets you examine and match existing backorders to new customer orders. You can figure out if you have any backorders and open orders that match up, then solve that problem by connecting customers to ordered products and vice versa.

Again, not only does this boost your cash flow, it also improves your brand reputation and overall quality. That’s a great thing, particularly if your business is looking to grow in the near future.

Method 5: Predict customer orders and match orders to customer needs

Real-time data analytics can improve your cash flow management by helping you predict customer orders. Once you know how much product you need to order, you can order that product specifically to match predicted customer needs as a way to prevent inventory issues and wasted cash.

You can even use your gathered data to make borrowing decisions you know you can pay back. For example, you can take out a loan with your bank and use that money to stock up on inventory.

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This article was written by Kiara Taylor from Due and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to [email protected].