Your job as a wholesale distribution business is to ensure product gets from your suppliers to your warehouses to your customers. An industry known for tight margins and high expectations from both customers and suppliers, everything in your business needs to flow.
While inventory is one part of this, something we discussed in our article on inventory control and fulfillment, it’s not the only element of your business that requires tracking and management, because with the movement of product comes the movement of money.
One of the oldest and most fundamental requirements for any business
Controlling the way that money flows into and out of your organization is a constant challenge, one that impacts your relationships with suppliers, reputation to customers, and ultimately your ability to generate profits now and in the future.
A process left largely unchanged for decades, recent advancements in technology have empowered businesses to do more, leveraging tools that allow them to reshape and realign the accounts receivable (AR) and accounts payable (AP) functions and shared service center business processes.
Three goals for improving money flow at the distribution business
For the distribution business, this means that there is a continued push to break down silos, embrace data analytics and business intelligence to improve decisions, and ultimately connect adjacent business functions to increase speed and decrease back-office costs. With the right processes and technologies in place, you can deliver the following benefits:
Break down silos
One of the biggest challenges for any company’s cash flow is siloed data. Not only do you have to combine the way money flows into and out of your organization, you need to align this information with adjacent functions as well. Treasury management, procurement, tax management, and so much more—if people have to spend hours or days just making sure the bills are paid using spreadsheets to connect data, your finance team is operating without the visibility they need.
With each additional location, currency, supplier, or even SKU you add, the time it takes to do even the bare minimum increases.
While there are many reasons silos exist, one of the most common symptoms is lack of integration. Too often, an organization’s back-office infrastructure resembles a “hair ball” of point solutions that talk to each other sporadically, if at all. “How much does my company owe to its suppliers?” “How much do my customers owe?”
The right technology not only allows you the ability to connect workflows to break down silos, it also provides you the right information when and where you need it by providing additional control over information flow and workflows.
Automate business processes
Whether it’s quote-to-cash, revenue recognition, or paying invoices, your distribution needs to make speed and accuracy a priority. Sadly, there are still thousands of companies of all sizes with manually driven workflows for some aspects of AR and AP. Held back by manual processes and emails, too many businesses lose sight of the big picture.
Paired with improved workflows and technologies, distribution businesses face an automation imperative that can only come when you can identify and rectify areas for improvement.
Curing your distribution firm’s cash flow woes with Enterprise Resource Planning
In order to bring together their operations, many businesses have looked to embrace modern technologies that can break down silos, provide a hub for connecting data, and automate traditionally manual processes in AP, AR, and more. As AR and AP are changing from serial processes and exception management to workflows with continuous audit and compliance, addressing the challenges will be a top priority for distribution firms in 2020 and beyond.
Enterprise Resource Planning applications have grown to deliver more and more certainty for distribution firms, who now leverage the cloud to connect various applications and create workflows that work. A recent IDC Marketscape report looked to address the role of ERP in AP and AR operations, noting the challenges your distribution firm may experience in connecting processes into a shared service center and comparing vendors on their ability to deliver. We invite you to read this informative report for free here.
Delivering on the cloud ERP benefits: NexTec and Acumatica Cloud ERP
For the growing distribution firm, you have many options—not only for the solution you choose, but the partner who takes you there. At NexTec Group, we understand the challenges your distribution firm faces and know how to help.
With more than a dozen locations and nearly a quarter of a century of experience in the distribution industry, you will be in good hands. No matter how large you are or complex your needs, we would love to help. Let’s get in touch.