Navigating around tight budgets to realise business goals has always been one of the main responsibilities of finance leaders for their organisations.
According to Rafael Chacon, integration leader for Global Payment Solutions Cisco Go-To-Market at Cisco Capital, banks and financial institutions are more cautious, with increasing interest rates and imposing stricter lending criteria, and this environment strains businesses that rely on external financing to manage cash flow and invest in growth opportunities.
Inflation, meanwhile, brings about higher operating expenses and reduced purchasing power which complicates budgeting and forecasting.
In a blog, Chacon enumerates ways that vendor payment solutions can make way for business growth within budgets, thereby helping out finance leaders to strategise and plan ahead for their companies.
Enhance cash flow management
CFOs can convert large, upfront capital expenditures into manageable, periodic payments. This approach can significantly improve cash flow management by reducing the immediate financial burden. For instance, instead of a large upfront cash outlay, a company can pay over time, which is often less than the sell price, preserving cash for other operational needs or investment opportunities.
Mitigate the impact of inflation
By locking in payment terms based on current fair market values, payment solutions can provide a hedge against inflation. Fixed periodic payments mean less exposure to the rising costs of goods and services over time. This stability is particularly valuable in an inflationary environment, where predicting future costs can be challenging.
Reduce dependency on traditional credit
With tighter credit markets, securing traditional credit sources can be difficult and costly. Payment solutions offer an alternative method, enabling businesses to access necessary resources without incurring high-interest debt or meeting stringent credit requirements.
Flexibility and scalability
Payment solutions are inherently flexible and scalable, aligning with the changing needs of a business. Whether it is expanding operations, upgrading technology, or scaling down in response to market conditions, these solutions can adjust accordingly. Adaptability is crucial for CFOs aiming to maintain operational efficiency in any economic climate.
Enhance vendor relationships
Vendor financing companies know their parent company better than anyone, thus providing the best support, guidance, and services to accelerate your company’s technology stack and position you for growth.
"Payment solutions enable companies to maintain financial stability and drive growth, offering improved cash flow management, inflation mitigation, reduced credit dependency, and enhanced operational flexibility," Chacon says. "By embracing these solutions, CFOs can better navigate the complexities of the current economic landscape, ensuring their businesses remain resilient and competitive."
