What’s more important – improving cashflow or reducing risk?

We ask this question a lot when deciding how we can improve CreditHQ. Cashflow Forecast

Do our users care more about reducing the risk that their business is exposed to through dealing with companies whose finances are not particularly stable? Or are they more concerned with ensuring that the cashflow forecast that they have is accurate, and based upon real world information, rather than paper based expectations?

Why is this important? 

In our case it helps us determine the prioritisation of data that we put in front of our users and the weighting that we give to different pieces of data when we look to provide some insight into the kind of things that businesses could be doing to improve their performance

A customer who cares about cashflow will see accurate and timely payment information as key, and combining this with  bookkeeping data will allow for a real world cashflow forecast to be presented. For example, if Company X pays after 50 days even though the payment terms are 30 days, a standard cashflow forecast would put the income down as appearing after 30 days, rather than the 50 days it will really happen in, which might result in a shortage of cash between days 30-50.

A customer who cares about reducing risk will see credit scores as potentially more important, and combining this with outstanding invoice amounts or current credit terms will highlight areas of risk that need addressing. For example, if Company Y has a high risk of not paying, then the fact that they have £20,000 of outstanding invoices with our company puts this £20k at risk of non-What do you think?payment which could be detrimental to our business.

Of course, both aspects are important to all businesses, but sometimes one is more important than the other.

What’s more important to you and why?  Let us know at hello@credithq.co.uk.

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