Why local businesses should rethink payments, cash flow, and foreign exchange risks

This, she said, is particularly, as businesses embrace digital transactions and engage more with regional and global markets.

"Growth must be supported by strong financial systems," Ms Lobore said.

"A business should not only focus on sales. It must also manage payments, collections, cash flow, currency risk, supplier obligations and working capital."

Her remarks come at a time when many Tanzanian businesses are expanding their operations, importing goods and equipment, serving larger customer bases and navigating increasingly complex financial environments.

According to experts, companies can record impressive sales growth and still face financial pressure if they fail to manage liquidity and market risks effectively.

At the centre of this discussion is transaction banking, a financial service that is increasingly becoming a critical pillar of business growth.

"Transaction banking is a system which helps businesses manage the movement of money. It includes payments, collections, cash management, liquidity management, trade finance and digital banking solutions," she explained.

Whether a company is paying suppliers, collecting payments from customers, managing multiple accounts, tracking branch collections or conducting cross-border transactions, efficient financial systems are essential for smooth operations.

"As financial institutions, we are increasingly focusing on helping businesses put systems in place to ensure that these activities are safer, faster and easier to control," Ms Lobore said.

According to Ms Lobore, relying on manual processes and traditional cash-handling methods is no longer sufficient for companies seeking to remain competitive.

"Companies can no longer rely only on manual processes, cash handling or delayed reconciliation if they want to grow," she said.

While payment systems and cash management are important, another area demanding greater attention from business leaders is exposure to foreign exchange fluctuations.

Many Tanzanian firms depend on imports for raw materials, machinery, equipment and technology, while exporters earn revenues in foreign currencies.

This creates exposure to movements in exchange rates, which can directly affect profitability.

"Many Tanzanian businesses import goods, raw materials, equipment or technology. Others export products and earn foreign currency.

When exchange rates move, business costs and margins can change," Ms Lobore noted.

She warned that foreign exchange risk is not merely a concern for large corporations.

Small and medium-sized enterprises can also suffer when exchange rate movements are not properly anticipated and managed.

"If a business imports goods in US dollars and sells in Tanzanian shillings, exchange rate changes can increase costs before payment is made.

If the business has not planned for that movement, margins can be affected," she said.

The concerns raised by Ms Lobore are echoed by economists who argue that many businesses continue to place too much emphasis on revenue growth while overlooking liquidity management.

Economist and University of Dar es Salaam Business School lecturer, Dr Hildebrand Shayo, said a company's financial health is determined not only by how much it sells but also by how effectively it manages its cash flow.

"One of the biggest misconceptions among businesses is that strong sales automatically mean strong financial performance.

In reality, a company can be growing rapidly while facing serious cash flow challenges," he said.

According to Dr Shayo, poor liquidity management remains one of the leading causes of business distress, particularly among expanding enterprises.

"When customers delay payments and suppliers demand immediate settlement, businesses can quickly find themselves under pressure despite having healthy order books.

Managing cash flow is therefore just as important as driving sales," he added.