Using CRM software: to Forecast Cash Flow

Using CRM software: to Forecast Cash Flow

For organizations of all sizes,Using CRM software (customer relationship management) system is a crucial tool. It can assist you in keeping records of client personal details, previous transactions, and other interactions. This data can be used to develop client profiles, which can subsequently be utilized to predict future sales and cash flow patterns.

Brief Introduction: Using CRM software

In a previous blog we discussed how to utilise cash flow forecasting to better understand your business financial standing. The three types of cash flow forecasting discussed: (1) trend forecasting, (2) causal forecasting and (3) judgement forecasting. 

In this article, we’ll go through how to use CRM software to improve cash flow forecasting using both trend and causal forecasting.

You’ll need to develop a buyer persona for each of your customers in order to use a CRM to estimate future sales patterns. This will contain details such as:

  • Contact information 
  • Company/client size, location
  • Interactions with your company

Integrating this data with: (1) past previous purchases via invoices or sales records, (2) data on requests for quotations, and other metrics gathered through your accounting system can result in a gold mine of data that can be used to start making reliable future cash flow estimates.

What Else can this Data Do?

Furthermore, this data can assist your marketing teams in focusing their efforts in the appropriate way by investing in initiatives that yield higher value clients rather than ones that do not.

For instance, if you invest the same sum of money on Facebook and Twitter advertisements and get the same number of traffic and sign-ups from both, and you use your CRM software to figure out where your clients came from.

As clients purchase from your business over time, you may observe that Twitter clients purchase smaller, lower-value things compared to Facebook clients who purchase larger, higher-value items. You’ll figure out that the Facebook client’s client value is higher than the Twitter client’s client value. This data is only available after a period of time spent analysing sales records. Analysis happens within your accounting software. In this situation, the marketing team might deduce that increasing the company’s Facebook ad expenditure will result in higher total returns. What looked to be the same amount of traffic also turns to a multiple customer value.

In short, a business can boost its marketing budget’s return on investment (ROI) by combining CRM and accounting data. Read more here: How to find and retain high value clients.

Keep track of your cash flow estimates with these tips: Using CRM software

  • Analyse the historical sales and revenue trends for your company. When forecasting future trends, you can work from this baseline.
  • Keep track of your sales pipeline and also forecast future sales using CRM software. Forecast this way to better your cash flow.
  • Ensure you have a strong understanding of your projected expenses for the future and furthermore stay on top of your company’s expenses. Staying within your budget will keep your cash flow in check and prevent any cash flow issues.
  • Ensure you have a solid grasp of your projected accounts receivables and closely follow your company’s receivables.
  • Plan ahead and stay proactive. A cash flow forecast will help you prepare for any financial challenges you may face.

Using Skhokho CRM and Accounting Software

The first part is to build a client profile. There are two ways of creating a client profile on Skhokho: (1) Within the project management app as a project manager and (2) within the accounting app as the accounting manager or team. 

There is a reason why sales departments don’t get to create and update client information; Converting a lead ends their involvement. But from then on, they must work closely with project managers to maintain a relationship. Thus, Skhokho provides sales representatives with access to client data from within the sales app.

Sales teams can: 

  • View the list of active clients
  • See the client profile information, quotes, contacts and revenue via invoices
  • Maintain relationships with the clients
CRM Client Profile Page

Create a Future Cash Flow Estimation

The following sources make up future cash flow:

  • Recurring income from existing contracts (can be estimated from the recurring invoices)
  • Estimated revenue from existing clients (can be estimated from the client profile page, based on the contract value or current trends)
  • Expected revenue from trends analysis (can be estimated from current and historical invoices)
  • Expected potential revenue from current leads (estimated from the opportunty value and lead conversion rates)

Measure and compare projected and actual results

As an additional tip, start building Objective Key Results (OKRs) for your cash flow. Having determined what your business’ value is, you can work on improving it and setting goals around it.

Let’s assume you need R1.5 million in the next 5 months, but you know you’ll need more. You could name this aim “Lead to higher profitability by 35%,” for example, and develop an OKR for it. Then begin to develop Key Results, activities, and a strategy for achieving them. It might be anything from raising marketing spending to focusing on high-value clientele to get those outcomes.

Measuring a variable is only the first step on the road to success, and Skhokho provides all the tools you need to track, monitor, report on, and even start changing critical business indicators proactively.

The Important Benefits of cash flow forecasts

Forecasting corporate cash flow has a variety of advantages for businesses. The most obvious advantage is that it can assist a business in determining how much cash it will have forthcoming in the future.

This can be beneficial for budgeting and making strategic resource allocation decisions. It assist a business in identifying possible cash flow issues and taking actions to rectify them before they become too problematic.

It also be used to measure development and evaluate the efficacy of different company initiatives. Forecasting can be a useful tool for firms of all sizes in general.

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