Top Tools to Improve Cash Flow: Tips for Cash Management

Having solid cash management practices is one of the most essential processes in any company. Without a set of smart strategies for monitoring, assessing and improving the company’s financials, it can quite simply find itself out of business.

Sound cash management strategies keep your business in the green by helping to:

• Identify opportunities to reduce operating costs and avoid liquidity shortages
• Create time efficiencies for you and your business by automating tasks
• Streamline payments and receivables
• Create new opportunities, like being able to accept new forms of payment
• Mitigate risk by putting controls in place.

Fortunately for businesses, there are a variety of cash management tools and solutions available to help manage the entire cash flow cycle. While it is always great to have options, the sheer amount of cash management services available on the market can make choosing the right options daunting.

Here are a few solutions to consider that could help you better manage your business’s cash flow cycle.

• Back to basics – Start with the basics of online banking for your business. While this might already be a solution your business has implemented, you might not be using it to its full potential. Online banking can help you manage cash flow more efficiently, allow you to view real-time reporting on balances and transactions, move funds and make payments more easily, and even provide proactive fraud prevention solutions.
• Make cash digital – A recent nationwide study by Cash Connect and One Poll revealed that out of 1,500 people surveyed, 40% prefer to use cash as their payment method. Conversely, 61% of the 500 financial decision makers surveyed in the same study reported that their businesses would prefer consumers pay by credit or debit card. So, where is the discrepancy? Many financial decision makers cited efficiency and ease of handling cash among their concerns. Solutions like daily credits and smart safes can help digitize cash. Smart safes allow businesses to deposit money directly into a secure safe that automatically calculates the amount of money deposited, removing human error from the equation. The money deposited is then available in the business’s bank account the next day, without having to visit a bank in person.
• Faster payment options – The payments landscape is experiencing a drastic change. Paper checks are on the decline. Automated Clearing House (ACH) and wire transfers allow you to pay employees via direct deposit; send electronic payments to vendors; collect payments more easily, safely and swiftly; quickly and securely transmit funds worldwide; and even schedule your fund transfers ahead of time or on a recurring basis. Interest in real-time and faster payments expanded when the Federal Reserve announced it was developing FedNow, a real-time payment rail to provide an alternative to The Clearing House’s RTP rail. Consider using these rails to fund payroll accounts, make last minute invoice payments or to offer disbursements to consumers.
• Streamline collection – The payment collection process has also proven to be cumbersome — after payment is received from a client or partner, it can often take an in-person trip to the bank and numerous days before the funds are available. With solutions like Xpress Deposit, and Lockbox you can collect payments from anywhere. These solutions allow you to deposit checks anytime, anywhere, giving you access to funds sooner and helping you keep track of cleared checks.
• Remove the manual work – Ask yourself what you could be doing to grow your business instead of spending time on payments. With solutions like Integrated Payables (IP), you can do just that. IP allows you to completely remove the manual work associated with payment processing by automating and incorporating all payment types into a single, streamlined B2B payment process.

Implementing even a few of these cash management strategies can make a meaningful impact on your business. So, where should you begin?

The best place to start is by analyzing your business’s immediate and long-term needs in terms of growth strategy. Once you have identified areas that could be improved or streamlined using payment and cash flow solutions, talk to your bank to see how they can support your business and get the process started.