5 Cash Flow Management Strategies For Overseas Businesses
by Abdul Aziz Mondal Uncategorized Published on: 04 September 2018 Last Updated on: 27 September 2024
Dealing with a global business can be a quite a task – taking care of geologically scattered teams, handling a universal customer base, and looking after operations at a large scale… the list is neverending. However, among all these aspects of an overseas business, the management of cash flow is the most challenging of all. Fluctuations in currency, uncertainty about overall revenues, diverse credit periods and new financial regulations can influence the in and outflow of cash in a business. This can drive your business to lose its financial credibility over a period of time.
With overseas business operations being a vital aspect of the era of globalization, it’s imperative to strategize it right. In this article, we list down five strategies that will help you ace your business’ Cash Flow Management.
1. Go For A Foreign Currency Account
In the event that your business deals in a specific currency regularly, it’s best to opt for a foreign currency account for your business. It helps you to be prepared with the money and empowers you to process payments quickly. Another huge advantage is that it eliminates the danger of losing cash in currency exchange. Here’s an example of how a foreign currency account can make your life easier:
An overseas provider has raised an invoice which you have to clear quickly to get the merchandise. A foreign currency account will enable you to clear the invoice instantly. There is no need for you to waste time or money over currency exchange, for paying your merchant. Both onshore and offshore banks offer you the option of a foreign currency account.
2. Opt For Budgeting Tools
Budgeting tools are crucial for global businesses. Tools likePlanguru, Profix, Centage, Scoro, etc. Spare you the time and labour of figuring out the currency exposure for numerous international invoices and automate everything. They are anything but difficult to use, keep you abreast of new highlights and are highly secure. With the assistance of these tools, a business can arrive at the inflow and outflow of cash in their home currency. Once you have done this, you are in a position to make the right choices.
3. Minimise Redundancy, Omission & Errors
Make sure you do not ‘double count’ cash flow from resources mentioned independently on the firm’s financial statement. This especially applies to receipts from receipts of refundable GST, trade receivables, and receipts from the selling of finished inventories. Apart from redundancies, it is imperative to watch out for mistakes as well. The exclusion of inflow and outflow of cash, treating net profits and income as the same, not reconciling your books, not inspecting all the important tax documents, etc. are probably the most widely recognized mistakes that businesses need to be conscious of while managing cash flow.
4. Use The Currency Option
The term ‘forward contract’ must be common knowledge for you. It’s an agreement according to which you can buy a specified amount of money at a set currency exchange value. Essentially, it secures you against any changes in the rate of the currency. Currency option is quite like a forward contract. Nonetheless, there is no commitment to exercise it. If the currency rate is favorable, you can use this alternative. Consider this alternative when the demand isn’t clear or when the buying parameters are not fully known.
5. Choose To Transfer Online
Pay all your international invoices online. Transfer money online with InstaReM. InstaReM doesn’t charge any margins on FX rates and keeps your money transfer free of all hidden charges, thereby, making cross-border payments affordable. InstaReM also empowers global businesses to make bulk payments through Masspay, a configurable solution for SME/corporate users to control and manage their high-volume remittances to multiple beneficiaries in several currencies through a seamless process.
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