The Ins and Outs of Cash Flow Management
What is Cash Management?Cash management, also known as treasury management, is a key component of operating efficiently and maintaining financial stability. It’s the comprehensive strategy of managing how cash enters and leaves a business. Typically, the chief financial officer or business manager takes accountability for an organization’s cash management strategy. The process involves making the most efficient use of cash from planning, collection, disbursement and investment of funds for your business.
Many organizations choose to outsource part or all of their cash management responsibilities because it can help optimize time, money, and other valuable resources. Banks are a primary financial provider for cash management services.
How Cash Management Will Benefit Your BusinessAccording to SCORE/Counselors to America’s Small Business, a study conducted by U.S. Bank found that 82% of the time, poor cash management or poor understanding of cash flow contributes to the failure of a small business (2016).
In the business world, cash is king. Proper cash management allows a business to know exactly how much cash they have readily available. Knowing this will allow you to collect as little debt as possible, leaving more control in the business owners’ hands and less authority in the hands of investors or other debtors who want a say-so in how the business is run.
What are some examples of cash management tools?Payables solutions allow your business to operate faster and smarter when making one-time and recurring payments. By leveraging electronic options like Automatic Clearing House (ACH) transactions and wire transfers, you simplify the way your business handles payments while saving time and money.
Remote Deposit Capture (RDC) and merchant services allow your cash flow to run smoothly, giving you more time to focus on other areas of your business.
sweep accounts, excess funds are swept from your accounts to your line of credit, investment account or other internal accounts.
Establishing efficient cash management services and strategies can yield big wins for your business. We recommend leveraging payment options to get paid faster, delay cash outflows, and hold onto your cash.
To learn more, meet with one of our experienced treasury management officers. We can help you evaluate your business priorities, discuss any obstacles in your way, and determine the best financial solutions to maximize the potential of your business.