13/10/2017 15:32 BST | Updated 16/10/2017 10:22 BST

How To Invest In Your Business During A Tough Economy

With the challenges of the economy, businesses need to get innovative around managing cash flow and investment.


"Investing in your business in a challenging economy requires innovative ways to manage cash flow effectively", says Dave McCall, Nedbank National Head of Transactional Banking, Global Trade, and Investments.

As money experts, Nedbank is mindful of the economic challenges businesses in South Africa face, compelling entrepreneurs to look for innovative ways to manage cash flow effectively and optimise savings for their businesses.

In addition, in pursuit of its new brand promise to enable clients to 'see money differently'; Nedbank believes that a better understanding of how the recession and downgrades affect business and a well-managed cash flow is key to planning how best to overcome these adversities.

Pivotal to this success is deciding what would be appropriate borrowing levels and capital structures, and, for example, whether to dip into personal funds or borrow from the bank?

Here are some ways to manage investment and cash flow in a tough economy:

1. Manage your debtor and creditors

Manage your debtors and creditors by having a very clear understanding of the timing and quantum of funds coming in to or going out of their accounts in the short medium and long-term. Also, have an understanding where your funds are at any point in time, where they are coming from as well as where they need to be.

2. Optimise liquidity associated with payments and receipts

Optimise liquidity associated with payments and receipts by earning as much interest on excess funds in your accounts. You can also invest in call and term deposits and minimise the amount of interest paid on borrowed funds. If appropriate, you can also offset the two i.e. debits and credits either manually through sweeping funds or through the use of an appropriate cash management system that will automate the process of interest optimization.

3. Use technology to become more efficient

By integrating your banking system with your line of business system you will be able to achieve greater straight-through processing. For example, do not duplicate the capturing of payments; use statements download and account reconciliations, and reduce human intervention and time to create efficiencies and reduce risk.

4. Effectively manage your cash flow

Carefully plan and actively manage those suppliers you need to pay and those customers who need to pay you in the short medium and long-term.

The days of "business as usual" are over. Business owners must tap into the latest technology and information available to become more efficient and ride out the economic storm,' concludes McCall.

For more information on Nedbank Business Banking, you can email business@nedbank.co.za.