In this blog, we give a high-level overview of the overall financial benefits that medical supplies businesses can enjoy as a result of using Business Intelligence and analytics tools.
A research report published by IBISWorld last year highlighted the critical success factors for manufacturers and distributors of medical device and supplies. One of them is financial management, as cash flow is a very important component for businesses with high inventory levels. woman-desk
Cash flow management
For any organisation to survive, compete successfully and grow revenues, cash must be effectively managed to ensure a positive cash flow. A positive cash flow means that the amount of money going out at any particular point in time is equal to or less than the level of money coming in. An organisation may show a good profit figure on paper, but if it cannot maintain sufficient cash flow, it will struggle to operate and eventually, fail.
Good cash flow management is particularly important for distributors of medical equipment and supplies. Since in these environments, stock levels tend to be high with a complex range of products, which in most cases consists of high value items. And with high value items, buying cycles may be longer, so at times, there could be a significant gap between the time that you buy the equipment and the time when revenue is received from sales.
Business Intelligence is your guiding light
Your BI and analytics tool can give you the necessary insight into your financial data to better manage your cash flow and overall financial performance.
Analysing cash flow and the related financial processes that impact upon it will determine whether your company is healthy and capable of weathering the tempests ahead. It will also be able to show if your organisation is heading for a cash crisis and potential failure.
How does BI help with cash flow management?
Effective cash flow management requires reliable and timely accounting information on a constant basis. BI tools can extract the necessary financial data from your ERP system and several other sources, analyse your data, and present the findings in a simple, user-friendly manner.
It can also inform the decisions you need to make that affect cash inflows and outflows. If you expect a business downturn or an anticipated increase in demand, you can put in place the necessary measures to ensure only a positive impact on cash flow.
For instance, if you see a product that is not selling or moving very slowly, you may choose to discontinue distribution / manufacturing of a certain equipment, to stock more of the profitable products. Alternatively, if you're forecasting stable sales and continued profits you may elect to lower the level of cash by lowering your product prices and margins to gain additional market share.
The insights provided by Business Intelligence and analytics tools can bring great value to your medical supply business, as they enable you to forecast and strategically plan for the future. Overall, Business Intelligence can help a medical supplies business enjoy cash flow management, improved revenue and profits.
To dive into the subject and better understand how BI can help your business enjoy the above benefits, download our whitepaper 'Keep your finger on the pulse', which outlines the key trends and success factors for suppliers to the healthcare industry and how the right BI tool can be the key to success.