Cash Flow

Finding your Productivity Boosters

Where Can You Find Cost Savings?

Finding your Productivity Boosters

Low productivity, whether from excess inventory, idle staff or underused equipment, can put a punishing burden on a growing business. Optimizing a business's productivity can boost cash flow and make the most of every dollar of working capital.

SunTrust Research found that the top goal of business owners is to grow or increase profitability.1 By taking advantage of the latest techniques and technologies to improve basic processes, most businesses can log productivity gains and find additional cash flow.

Go electronic

Electronic payments processing - both payments and collections – does more for a business than save printing and paper handling costs. Receiving invoices electronically – whether by ACH, card payment or Online Bill Pay & Presentment - speeds up collections time, getting money in the bank faster. Businesses that still need to process paper check can look at ways to convert them to an electronic format with Online Check Deposit. Paying invoices electronically can take advantage of fast pay discounts along with greater cash flow visibility, easier reporting and better cash control throughout collections and payables. Additionally, more automated processing costs 2 1/2 times less in labor costs per invoice than more manual processing2, and it can lower fraud risk by eliminated the number one source of fraud, paper checks.

Outsource non-core capabilities

Forty-four percent of businesses surveyed said outsourcing had a high level of success in controlling expenses, thus improving cash flow. Seasonal or sporadic types of work, or highly skilled tasks where workers are hard to find are ripe for outsourcing. Businesses may pay a bit more for the service, but only pay for productive time, not idle time, training and vacations. Leveraging advances in Cloud and Software-as-a-Service (SaaS) vendor systems can provide cost-effective, pay-as-you-go solutions to growing businesses looking to outsource HR, IT, PR, legal, payroll or even marketing and procurement functions. These services are carefully designed for ease of use and are typically priced at a fraction of the cost of in-house operations and software costs.

Get better deals

Consolidating purchases, looking for suppliers that offer volume discounts with more frequent and flexible delivery, lower levels of on-site inventory and vendor financing can all have a direct effect on expenses and cash flow. Renegotiating supplier contracts with more favorable terms, a tactic 37 percent of businesses are undertaking, will control expenses as well as optimize productivity in procurement and inventory functions. Another 30 percent of small businesses are planning to develop better sourcing capabilities in an effort to pump up their productivity and cash flow.

Manage equipment utilization

The best way to get a high return on assets (ROA) – considered one of the most basic measures of a business’s value – is to keep the “assets” part of that equation as small as possible. That starts with using the equipment you have as efficiently as possible. Evaluating utilization for each fixed asset provides the initial roadmap for equipment productivity. This simple measure helps to identify opportunities for improvements. The ultimate path to greater productivity can come from operations improvements like scheduling and queuing, upgrade/downgrade of equipment, outsourcing (to overcome structural underutilization) or optimization of the labor/automation mix. With fluctuating labor prices and wage regulations, this is an area that needs constant monitoring.

Use business process optimization to find opportunities

One-quarter of business owners plan to re-engineer processes to reduce costs and find savings in optimization. Businesses can benefit from implementing an ongoing process of identifying, redesigning and optimizing core processes to find improvements in efficiency, quality or customer experience. The changes this business performance optimization initiates may directly affect production or the you go-to-market approach. Business process optimization can be applied equally well to “back office” functions, e.g., billing and reporting, and to core manufacturing, logistics or service functions as well.

Find ways to use productivity improvements to boost your business. Talk to your SunTrust Relationship Manager about ways productivity growth can grow your business and its value.

1 SunTrust Research, Q1 2016

2 APQC’s survey on accounts payable (AP) process productivity, June, 2015

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