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Scaling a franchise network is as thrilling as it is nerve-wracking. For a CFO, balancing growth and liquidity is a high-wire act. Every new location brings additional revenue potential, but it also accelerates payout demands. Growth strains working capital, and every bottleneck creates friction.
Take payouts, for example. Without control over payout timing, even strong brands can experience cash flow crunches, missed discounts, and unnecessary borrowing.
That said, franchise growth doesn’t need to come at the expense of healthy cash flow. Data-driven strategies improve liquidity with a continuous improvement approach. But this method is impossible without the right toolset—and many accounting teams don’t have it. According to one recent report, 38% of US businesses still rely on spreadsheets to manually forecast cash flow. In another study, CFOs reported that less than 25% of their finance processes are digitized or automated.
For franchisors and franchisees relying on manual approaches, this is a significant long-term issue. Manual accounting doesn’t update in real-time and causes long payout periods. Franchises without control over payout timing end up hindering franchise growth and operations. How? It reduces liquidity.
The Problem: Payout Timing is Out of Your Hands
Many franchisors run on payout schedules driven by habit or franchisee requests—not by optimized cash positioning or data-driven key performance indicators (KPIs). Without centralized, automated controls:
- Float is drained prematurely.
- Liquidity windows are missed.
- Working capital isn’t used strategically.
As a result, many organizations find that their standard operating procedures for payouts create cash flow bottlenecks. This puts a strain on liquidity and can dip into pushing franchisees towards overusing credit. It’s impossible to successfully optimize franchise management without addressing the connection between cash flow, payouts, and liquidity.
Forecast Blind Spots with Data-Driven Approaches
Fragmented franchise networks often operate multiple ERPs or local accounting systems, creating incomplete data. Without clean or accurate data coming from a central management software, franchisors and franchisees run into a wide array of problems.
First, poor data collection increases the risk in cash forecasting. Expenses and revenue, if not inaccurate, can become quickly outdated. This reduces the ability to make informed decisions and forces reliance on estimates instead of real-time cash positions.
Furthermore, this lack of information limits your ability to plan investments, repay debt confidently, or meet your bottom lines.
Gain Control Without Adding Headcount
Increasing labor drives up labor costs and further minimizes profit. But that’s not the only reason that adding to headcount can be unproductive. Many day to day operational issues stem from outdated technology and processes, not small staffing.
Shifting from manual tasks to automation clearly offers a path to boosted efficiency. And this is true in regards to accounts payable (AP) and payouts. Franchisors can identify areas where they can automate the payout schedule by transaction type and franchisee, keeping cash flow spaced out and maintaining liquidity.
Approvals appear to be complex, but these, too, can be automated. Since approvals are tied to thresholds, urgency, or liquidity triggers, they can be more easily mapped to rules. These rules can then be applied automatically, reducing time spent on these tasks—and freeing up time for the team.
Since quality automation solutions also integrate with an organization’s ERP, it’s possible to eliminate duplication and ensure compliance.
The Strategic Advantage for CFOs
Payout timing is often a bottleneck that can become a competitive advantage. When you control the timing of payouts, franchisors and franchisees both tap into greater liquidity and greater direction over growth.
Essentially, automating this process optimized float: It frees up capital for growth and debt reduction. It also enables the team to reduce financing costs to avoid short-term borrowing—this is due to greater liquidity and more accurate cash flow. Scheduling payouts in advance also makes cash flow more predictable, improving the decision making process.
Consider this well-known scenario: Franchise payouts typically take 30-90 days—an incredibly lengthy period for most businesses. This creates unnecessary cash flow bottlenecks, leading to a reliance on credit lines to cover periods of low liquidity. However, increasing debt further adds to the franchise’s liabilities, hindering growth. It is a reactive strategy, and one easily avoided with automation.
Rather than force franchisees to wait a month or more to access capital, automation can cut invoice processing time down to 2.9 days. For payouts, it may be even faster, depending on your specific AP solution. The benefit is clear—faster payouts can dramatically reduce credit use and improve cash flow. With the ability to schedule payouts and automate approvals, franchisors also retain control over strategic payout periods, rather than accelerating payouts to the detriment of the overall business model.
These benefits don’t stop at the border but apply to cross-border transactions as well. At least, in part. Even if payouts take a few extra days compared to domestic units, these transactions still occur in real-time. This immediate visibility further ensures accuracy and coherence in reporting real-time liquidity, further empowering the finance team and improving the customer experience and customer satisfaction.
Drive Revenue with Teampay
For CFOs, payout automation isn’t just operational—it’s strategic. It’s how you scale without sacrificing liquidity or taking on avoidable financing costs. Automating payouts and AP processes drives healthier cash flow, ensuring forecasts are more accurate and transactions remain compliant.
Teampay provides CFOs with the tools necessary to maintain liquidity, gain control over spend, and drive growth. With its AP automation and spend management suite, franchisors and franchisees can leverage intuitive technology to resolve critical bottlenecks with ease and without increasing overhead.
When it comes to having an optimized AP system for franchises, you don’t need siloes, fragmented data, or manual tasks. Instead, our robust platform streamlines and simplifies payouts, procurement, and expense management. As a result, finance teams are empowered with full visibility into finances without taking on extra workload.
Discover how Teampay gives finance full control over payout timing, reconciliation, and cash optimization for your franchise system. Download the Key Capabilities for Distributed Spend Management product sheet.
