Tips for Improving Cash Management

Cash management is essential to running an effective and profitable company. This includes the collection, management and short-term investment of cash. Handling this critical business process effectively produces several important business benefits. This includes ensuring organizations are financially stable, solvent and not at risk of bankruptcy.

Effective cash management allows you to take advantage of timely opportunities or investments, pay for upfront costs or unexpected expenses, and cover day-to-day operating costs while you wait for receivables. A successful strategy puts your company in a good position to grow by freeing you from cash constraints. In addition, a solid strategy for managing cash strengthens vendor relationships, provides visibility into your organization’s financial health and cash on-hand, and helps you identify cash problems before they arise.

Tips to Improve Your Cash Management Program

Now that you understand the benefits of managing cash effectively, there are several ways you can improve your company’s cash strategy.

  • Understand Cash Flow: It’s important for entrepreneurs, executives and relevant department managers to participate in cash flow management. By using key performance indicators (KPIs) of working capital and cash flow for each department, companies can foster accountability, drive business growth and improve the way they manage cash.
  • Forecast Accurately and Often: It’s impossible to manage cash effectively without accurate forecasting across several timeframes. In the short term, you should have an exact picture of your current cash balance. You can’t make business decisions based on inaccurate or incomplete cash balances without this information. You should enter updated cash balance information every day. This will significantly improve decision-making capabilities and cash flow accuracy. In addition to knowing your short-term cash balance, the key to a successful cash management program is managing cash in the long term. Know your cash balance expectations for at least six months into the future. This will help you manage your business more productively and avoid future cash flow problems. Accurate cash flow projections are critical to running a successful and profitable business. Direct Insite’s ePayments and invoice automation platform, known as PAYBOX®, features interactive reporting and real-time cash flow analysis to help companies optimize cash flow processes.
  • Improve Accounts Receivable: By reducing the number of days it takes to collect receivables, companies can improve their cash managing strategies. One way to improve accounts receivable (AR) processes is by offering discounts to customers who pay their invoices within 10 days. Direct Insite’s PAYBOX® offering helps companies manage discounting through a single portal. With PAYBOX®, suppliers can improve cash flow, enjoy more predictable payments and reduce profit loss from unearned discounts.
  • Optimize Accounts Payables: On the flip side, companies that improve accounts payables (AP) processes can also manage cash better. With increased automation in receipt of invoices, automatic invoicing processing capabilities and accurate discount capturing, companies can increase the efficiency and productivity of AP processes.

Technology can go a long way toward enhancing cash flow management programs in both large and small organizations. Companies that take a proactive approach to managing cash will increase corporate profitability and have time to focus on core competencies, satisfying customers and growing their business.

Direct Insite’s PAYBOX® solution is a powerful tool leading organizations use to automate and improve cash optimization. Direct Insite’s cutting-edge technology streamlines AP and AR processes, enhances financial performance and enables organizations to manage cash efficiently. To learn more about Direct Insite’s solutions, give us a call at (613) 873-2909 and ask for a private consultation.

Working Capital Management