It may well be a riskier world for finance – yet, with the focus on capital expenditure still 150% higher than the 5-year average, it’s clear that many CFOs are not afraid to make bold moves on shaky ground.
For the companies going for gold, cash flow remains the biggest obstacle. Digitalisation might be here to save the day, but when, why, and how?
At the end of 2021, most CFOs were optimistic about the potential growth climate. But now they’re up against a tidal wave of financial dampeners, including increased risk, rock bottom lending, inflation, late payments, supply chain disruption, and labour shortages. With small-to-medium enterprises struggling to smooth their cash flow, the ecosystem for expansion has become considerably more hostile.
But, by and large, CFOs aren’t switching to defensive strategies. They’re focused on investing in new product development and targeting new markets.
Technology investment is the spending front-runner and it goes hand-in-hand with the growth-hungry goals of today’s startup CFOs. You might recognise your priorities among this year’s top three: supercharging cash flow, product/market expansion, and upping expenditure. But can they all work in synchrony?
Our opinion is – yes. The right additions to your fintech stack (at the right time) can turn the tide on your cash flow so that you hit your growth goals.
If the pandemic taught us nothing else, it’s that fast-movers fare better – a well-placed sidestep keeps you out of the path of oncoming disaster. Learning from this, many CFOs are shifting towards leaner finance that delivers clearer sightlines, more accurate responses, and swifter action.
Of course, the problem is that digitalising and automating everything in your path takes equal research, time, and effort. The only solution is to work smarter, not harder.
So as a startup grows, CFOs will naturally need to identify opportunities to streamline processes (and at the right moment). But how do you know if the time is ripe for you to bring onboard fintech solutions? It could help to consider business consultant Scott Brown’s five stages of financial maturity:
In a business’s earliest days, they mainly focus on the first two stages, where their financial maturity is limited to buying and selling, and keeping records of invoices, bank account activity, and payroll. Here’s where most companies scrape by with manual finance management.
Beyond these simple accounting functions lies tax reporting and planning, forecasting, and long-term planning. This is where most companies will bring a CFO on board and should integrate fintech solutions to help them optimise and manage their finances.
But with a never-ending list of priorities, where do you start your digitalisation mission?
Top of the list for many CFO startups is balancing their cash flow, but it’s easier said than done.
High inflation is deflating margins – though not necessarily revenue. But when you’re a pacy startup, a lag between expenses and payment can be the difference between you and your competition (especially as the upfront costs of a business continue to grow).
On top of delays between initial investment and revenue, 60% of small businesses are currently struggling with late payments. They’re turning to loans to manage their cash flow, but finding that credit availability is the poorest it’s ever been. When it comes to cash flow, it’s “do or die” (or downsize) – but who can SMEs turn to in the current climate?
Taxes aren’t usually top of the list for solving a sluggish cash flow. But they could be. A company with an annual expenditure of over £6m is typically owed £1.2m in tax reclaims over the year.
Unfortunately, though, HMRC can hardly be trusted to swoop in and save the day – with tax reclaims taking anything from 3 to 9 months. Plus, it takes the average company 40 hours to put in their tax reclaims. That hardly screams agility.
“As a founder, using all alleyways to optimize cash is a must, and tax credits are a no brainer.” says Chris Priebe, CEO of Zelt.
By adding Adsum’s simple platform to your tech stack, you could deliver the funds towards your expansion efforts overnight. It’s a digital game changer for cash flow planning.
It’s simple: Use your taxes to solve your cash flow.
Adsum is a fintech application that gives 100% advances on R&D tax credits, VAT credits, and creative tax credits in as little as 24 hours.
Tax credits can be a lifeline for fast-growing companies with large expenditures and we can accelerate the funds to pay out in 24 hours. That’s your cash flow, fixed overnight.
There are no upfront fees and our service charge comes directly from the HMRC repayment, so there are no loose ends to chase. What else? No maximum advance amount, loss-making companies are eligible and upfront payment on any asset purchase.
Ready for rebates that match your pace?
Adsum offers fast, frictionless cash flow through tax credits financing. To find out more, contact us directly or simply start your claim today.