How banking solutions can help you manage sales and payments better in times of uncertainty

Do you have the right partners and the best technologies to grow with confidence?

Manufacturing and producing businesses that operate on a global scale often have complex challenges when managing all aspects of sales and customer payments. Throw the COVID-19 pandemic into the mix and things become even more challenging. This puts significant pressure on cash flow and slow growth strategies.

We spoke to businesses like yours to see how they use banking solutions to optimise their sales and payments processes – and how they play unsettled global trading conditions to their advantage.

Could new solutions help you better manage payment risks?

Expanding your customer base to decrease the need to depend on a small number of customers is not always easy. When you only have a few key customers, any issue in payment can cause real problems. One finance director at a manufacturing corporation said: "Our contracts are very large and complex and take a long time to produce. Sometimes when customers are late in paying, it creates problems like additional expensive hedging costs to compensate."

Broadening your customer reach brings further risk, because you’re selling to less well-known customers in lots of different countries with varying norms around business and trading.

On the other hand, when selling to a large number of buyers – including small customers and those in new markets where credit information can be difficult to get hold of – classification and credit scoring can be a challenge. Manual methods aren’t always able to keep up. As the finance manager of a growing mid-market packaging manufacturer said, "In accounts receivable, I use a scorecard to assess buyer performance. We often have to respond to late payments and chase customers."

It’s important, then, to ensure you have the best solutions in place to protect your business against risk – both market and customer – when expanding.

Payments can be received more securely by safeguarding against non-payment and streamlining your cash management, and using Trade credit insurance and receivables finance solutions, to help protect your business if customers are late in paying.

Other solutions that incorporate guarantees and export documentary credit, for example, can provide internationally accepted methods of settling trade payments to give new and existing customers greater confidence and certainty that contracts will be met. You can also manage fluctuations in price, foreign exchange rates and margin volatility across multiple markets with sophisticated global foreign currency solutions. And by incorporating services like next-generation virtual accounts, you can transform the way you record business transactions and manage large numbers of bank accounts.

Could you be doing more to release cash and strengthen your business?

Many manufacturing and producing businesses want to maintain or improve the health of their cash flow, but they often find their profits take a hit in the pursuit of getting money from customers sooner.

But by freeing up cash from receivables, you can protect your revenue and profit, and access the value from sales much faster. In turn, that means you can pay your suppliers sooner and strengthen your supply chain operations and relationships – or access the cash you need to invest in growth. As one finance manager in a growing mid-market enterprise in the packaging industry said, "We invest 8-10% of all our revenues to support the growth agenda, and in projects supporting automation and improvements."

Receivables finance solutions are available in most major currencies, quickly releasing working capital that’s trapped in sales invoices that are yet to be paid.

To optimise your working capital across your sales network, you should also look to improve the speed of payment collections. Incorporating next-generation services – like mobile payments and collections – can help. Plus, innovative technologies also let you resolve discrepancies faster thanks to real-time, on-the-ground servicing.

Together, these solutions work to increase the agility of your business, enabling you to push and pull payments 24 hours a day, seven days a week, 365 days a year. Moreover, increased agility bolsters your business against any unexpected challenges that might arise, like those brought about by the COVID-19 crisis.

Are you using the right technology to make your sales as efficient as possible?

Implementing enhanced automating processes can help reduce the time it takes for your business to convert its investments in inventory and other resources into cash flow from sales. Speeding up your cash collection process, and giving you access to up-to-date information.

You can also improve the efficiency of your cash management by using platforms designed to collect outstanding payments quickly, and at the lowest possible costs. Plus, by internally streamlining your sales transactions across different payment and collection systems, you’ll speed up your sales cash flow. That way, your business can put its liquidity to better use.

With faster, more efficient processing of sales transactions – achieved with the help of distributed ledger technologies (DLT), the latest Blockchain innovations, artificial intelligence (AI) and machine learning – previous paper-intensive processes are taken care of, freeing you up to work on the bigger picture.

What’s more, you can enhance visibility and control with cross-product dashboards and portals. These give you real-time payment systems that enable automated processes – and provide insights that you just wouldn’t get otherwise.

Using the latest technologies – like Swift, ERP and API – also makes for better security and transparency. It even improves your reconciliation capabilities thanks to richer, more consistent payment systems data across borders.

Is your current banking partner doing enough to help you grow your business?

Expanding into global markets isn’t without its risks. From customer defaults to currency fluctuations – not to mention a variety of business, regulatory and cultural differences – there’s a lot to take into consideration. It goes without saying that growing your sales and distribution network internationally can be a challenge – particularly when your customers and business partners are scattered all over the globe.

To overcome these challenges, it’s important to identify the right partners – those that have significant hands-on experience and the international scale to support your growth in many directions.

A good business partner can also prove invaluable when it comes to understanding regulatory and cultural practices in new markets – they’ve been there, done that, and will readily share their wealth of local knowledge with you.

Do you know which banking solutions can best help you optimise your sales process?

To be successful in an uncertain world, you need to make the most of the banking solutions that are available to your business to help optimise your sales and payments processes. Find a partner to look after your collections, currency needs and payment protection to help you confidently break into export markets, and with open account terms to help you trade competitively.

Could you leverage a flexible source of working capital in your receivables to be more agile and avoid cash flow issues created by extending credit to your customers? And could you use technology to increase the efficiency of your payment processing, despite greater payments complexity?

Get more insights into how businesses like yours use banking solutions to enhance their sales management.

Arrange a consultation with an HSBC specialist.