13 Apr 2011

Increase your cash flow with smart IT

We’ve become too accustomed to viewing technology as a cost centre, and the worst part about that is a lot of businesses then become reluctant to purchase new technology that can actually save money and increase cash flow.

The first step is to have an IT strategy in place. If you don’t have one, that’s your first problem. Developing an IT strategy involves understanding the cycles of the technology that runs your business, whether that’s your computer hardware, like your desktop equipment or your server, or the software programs you use.

Key questions to ask yourself are:

  1. How often do I plan to refresh those?
  2. What am I going to buy next?
  3. How much will that cost me?
  4. How suitable is the timing of that purchase?

Planning in this manner will prevent cash flow problems as it will show you when your most major expenses are due, help you prioritise your purchases in terms of your needs, and show you when you might delay the least important of those.

Another thing you might want to consider is moving from capital to operational expenditure. Business owners often look at a technology solution and just see thousands of dollars in one hit without realising that there are alternatives. Upfront capital expenditure puts pressure on your cash flow, so look into running your IT systems purely as an operational expense by using cloud computing.

Cloud computing allows you to pay per month for the technology solutions you need to run your business today—not what you may need in the future—and provides you with the flexibility to scale up or down as your needs change, a bit like paying for water or electricity services.

Using cloud computing can save you money in the long run if you think about the comparative cost of keeping that money tied up in capital expenditure. Again, better cash flow means you can use the money to grow your business.

There may be other technology functions you can pay for on an as-needs basis. Outsourcing—from a couple of functions to your entire IT—can also help with cash flow. The biggest financial benefit of outsourcing is that you do not have to hire staff and have them on your payroll to manage various job functions. This means you can reduce your costs and put that money into strengthening your core business instead.

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