The manufacturing industry is one of the largest industries globally. Manufacturing companies use raw materials, labor, machinery, and specific tools to make finished products for sale. It sees the creation of products that are used in many different areas of daily life. These products are typically created by processing raw materials and then selling finished goods to retailers or wholesalers, who usually sell them to consumers. Manufacturing companies usually have a lot of capital tied up in expensive machinery and also inventory. There can also be long sales-production cycles. It could be months from the production of the product to getting paid for the sale of the same.
It has been a tough few years for the manufacturing industry with the global pandemic disrupting many areas of the manufacturing process. Companies are looking for areas where they can streamline key activities, increase efficiency, and reclaim lost profits to return to the bottom line. Automating key accounting processes is one of the areas that’s been highlighted for change, thus becoming a huge opportunity for digitalization.
In manufacturing, there are Accounts Payables which have the requirement for payments to be made to multiple suppliers for items such as raw materials and transportation/shipping of the products. There is also the Accounts Receivable side where monies are both received and Collected from customers, usually large wholesalers and retailers. These can be in multiple formats, such as email remittances, lockbox files, and customer portal retrievals. Then finally, you have the Bank Reconciliation portion to check if all monies in company bank accounts balance with what’s listed on the general ledger.
There is quite a number of moving parts, all have to come together and run correctly to achieve satisfactory levels of cash flow within the organization. Cash automation software helps manufacturing companies take back control of their financial processes. Cashbook has the necessary experience to help manufacturing companies achieve significant levels of automation.
Deductions are a significant part of manufacturing and can have a negative impact on company profits. Manufacturing companies who supply their finished products to retailers or wholesalers usually get hit with deductions or disputes as they are also known. Basically, upon receipt of a shipment, a retailer may say, for example, that 10% of the total order is a deduction. They will provide customer-specific codes and reasons for each deduction to explain why they will only be paying 90% of the total invoice.
It’s up to the manufacturing company to investigate each deduction, bearing in mind you may have lots of customers nationally or internationally, and this will happen each month with every invoice. This can lead to thousands of deductions that need to be investigated manually by AR staff. It may be for small amounts, but when added up at the end of the year it can amount to hundreds of thousands, sometimes millions depending on your product cost.
With Cashbook’s Deduction Management software, this process is automated and deduction codes are bundled, making review within the organization easier and faster. This saves countless hours for your staff but more importantly, it allows you to recover more revenue from deductions than ever before.
Many manufacturing companies are using manual processes and legacy systems to complete their financial processes. Digitizing these processes leads to massive savings of time, resources, and overall costs, realizing huge annual savings for organizations. Cashbook has multiple software solutions that are used by our many manufacturing clients all over the world. We have the necessary experience in implementing our software with manufacturing companies that provide a varied range of products. We have seen all of the manufacturing-specific challenges and financial processes, and have tailored our products to solve business needs. Get in touch with us to discover how we can transform your finance department, why not request a demo today!