How to optimize cash management for your B2B services company

In the B2B sector, payment terms are structurally long, often exceeding 60 days. This situation creates a significant time lag between the completion of services and their actual payment, generating a permanent strain on cash flow.

This phenomenon is amplified by the need to continue to honor fixed monthly expenses (salaries, rent, suppliers) despite the absence of cash receipts. This results in a particularly high level of WCR, which can represent several months' sales.

The multiplication of customers and the diversity of payment terms make the situation even more complex, creating a constant need for financing to ensure business continuity.

B2B service companies are faced with highly irregular revenues. Contracts can vary considerably in size and duration, creating peaks and troughs in activity that are difficult to predict.

In addition, the seasonality specific to certain sectors, and dependence on a few major customers whose orders can account for a significant proportion of sales, can have an impact on revenue regularity.

The variability of revenues makes it particularly difficult to plan investments and maintain a stable level of cash flow, exposing the company to risks of financial stress during slack periods.

The B2B sector is characterized by particularly long sales cycles, lasting from several months to several years. These long cycles entail significant commercial and operational costs even before a contract is signed.

During this period, the company has to bear significant fixed costs (sales teams, pre-sales, development) without having the certainty of completing the sale. This weighs heavily on cash flow.

The complexity of B2B customer decision-making processes, often involving multiple contacts and approvals, lengthens these cycles even further and increases uncertainty about actual collection dates, significantly complicating cash flow management.

Automated payment tracking has become indispensable for B2B companies with a large number of transactions. This practice provides a real-time view of cash inflows and outflows, avoiding unpleasant surprises and costly oversights.

By automatically centralizing all payment information in a single system, companies can immediately detect late payments and anomalies. This heightened vigilance enables customers at risk to be identified quickly, and the necessary action taken before the situation deteriorates.

Automatic synchronization with bank accounts eliminates manual input errors, freeing up valuable time for finance teams, who can concentrate on higher value-added tasks such as financial analysis and strategy.

Cash flow forecasts are the cornerstone of effective B2B financial management. They enable you to anticipate periods of tension and surplus by taking into account all forecasted financial flows: customer receipts, fixed costs, investments and loan repayments.

These forecasts must incorporate different scenarios (optimistic, pessimistic, realistic) to enable the company to prepare for all eventualities. They are based on historical data, current contracts and the sales pipeline to establish reliable projections.

Regular updating of these forecasts, ideally on a weekly basis, enables rapid adjustment of the financial strategy in line with actual business and market trends.

Optimized cash flow management requires careful balancing of cash inflows and outflows. This involves negotiating favorable payment terms with customers, while maintaining good relations with suppliers.

Efficient invoicing processes, with clearly defined deadlines and simplified payment terms, speed up cash receipts. At the same time, the strategic staggering of disbursements helps maintain optimal cash levels.

This optimization also involves a structured customer reminder policy and the negotiation of supplier payment terms in line with the company's operating cycle. The aim is to minimize the time lag between outgoing and incoming payments.

Treasury software is the answer to all these problems. It centralizes all financial information, automates the monitoring and reporting process, and provides a clear, instant overview of the cash position. It provides a clear and instantaneous view of the cash position.

Fygr is a cash management software package that is ideally suited to the cash management needs of B2B service companies.