It’s no secret that the COVID-19 pandemic forced a surge in technology adoption across numerous industries. However, despite the availability of technology-driven forms of payment such as credit cards, P2P, and mobile wallets, 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. Furthermore, 51% of respondents agreed that using cash helps them budget their money, underlying the notion that cash remains a mainstay. Knowing these preferences amongst consumers, it’s imperative that businesses continue to make cash payments a priority.
The same study revealed that many financial decision makers remain concerned with the safety and security issues that accompany having cash in-hand at their business, as well as the efficiency and ease of handling it. For those decision makers, there are many technologies available that can help make business’ more efficient and safe, so they can continue to offer a variety of payment methods to meet customer demand. The key is to make cash more easily accessible to consumers and a safer option for owners or CFOs who often oversee reconciling at the end of each day.
Here are things to consider to help better manage business finances.
- Effectively manage payables and receivables – If you can, Invoice right away. The sooner you get an invoice out after your products or services are sold, the sooner you get paid. Also, if possible, when taking orders request deposits, or offer discounts to encourage early payment. This will help with cash flow. Think about services that will help you manage your day-to-day transactions. Make sure you have basic services like business online banking, ACH, check imaging and wire transfers, and consider things like remote deposit, merchant services, lockbox services or integrated payables. When it comes to payables, try to prioritize bills, and negotiate flexible terms and discounts with your vendors. Like in your personal life, try to always pay your bills on time to avoid late fees.
- Find a relationship manager you trust – When choosing a bank for your business, make sure you have access to a dedicated cash management relationship manager. A relationship manager can help you determine the right services to improve cash flow and gain processing efficiencies – all things that add to the bottom line. They can also tell you about the latest fraud prevention tools.
- Reconcile Cash Daily: Many businesses (75%) currently utilize the “cash to bank” method, meaning someone transports cash at the end of each day from the business to the bank to be deposited. This method is not only risky in that it leaves your business vulnerable to theft, but it is also inefficient from an operational perspective. Solutions like daily credits, smart safes and armored carrier management services can help mitigate these concerns. 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. Once in your smart safe, an armored carrier management service can assist in transporting the money from your business to your bank. Removing human error from the equation and returning time to you and your employees.
- Forecast your cash flow – Not only is forecasting a good idea for budgeting, but the process could help you uncover any uncollected or unpaid invoices. Create a habit of consistently checking your forecast – at least monthly– to help plan for the unexpected and make the right financial decisions. Cash flow is about knowing what’s always happening with your money; for many businesses, the time it takes between depositing money and being able to access the capital for expenses is often too long. Smart safes allow for a more expedited deposit of cash to your bank account. Once the money is deposited into the smart safe, your business receives a credit, before the money even reaches the bank. This allows you to access your revenue for other business needs.
Having a clear picture and plan for cash management helps prepare your business for the future and to forecast more accurately during any type of circumstances. This allows your business to not only avoid negative cash flow but also plan for unforeseen circumstances whether that be through bridging gaps with your Business Line of Credit, or assessing the best credit options to aid in cash flow should a crisis arise.
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