Four cash flow management strategies for enterprise liquidity management

What you’ll learn

  • Understand the purpose of cash flow management.
  • Manage liquidity proactively by adopting the four cash flow management strategies.
  • Learn how treasurers can drive value for enterprises by automating cash flow management.

A key element in operating a successful and financially healthy enterprise is implementing effective cash flow management strategies. A positive cash flow is important for good financial health. An enterprise treasurer should follow these cash flow management strategies to manage working capital efficiently and gain a competitive advantage.

Purpose of cash flow management

Cash flow management is, at its core, putting the company’s working capital to optimal use by:

  • Integrating seamlessly with multiple data sources such as banks and ERPs
  • Recording and exploring expected & actual bank transactions to avoid false/unexpected transactions
  • Reconciliation of previous day cash position
  • Having a 360-degree view of company-wide cash positions
  • Managing intercompany balances and notional pools
  • Lowering excess cash on hand
  • Tracking cash inflows and cash outflows accurately and timely

Due to the increasing need to improve cash management with market volatility and unpredictable cash flows, enterprises should follow certain cash flow management strategies to keep a positive cash flow.

Four cash flow management strategies that enterprises should adopt

The following are the four pillars of best in class cash flow management:

  1. Connectivity and data repository: Gathering and storing bank transactions and information.
  2. Global cash visibility: Reporting on cash to meet strategic needs.
  3. Positioning and Reconciliation: Identify cash surplus and deficit, make investment/borrowing decisions and reconcile exceptions.
  4. Bank account tracking and optimization: Tracking all bank account details including signers and optimizing the number and structure of bank accounts.

The following cash flow management strategies should be followed to achieve the four pillars:

  1. Use integrated platforms with real-time connectivity with banks to get real-time data. The SaaS and cloud-based platforms being big data platforms enable an enterprise to store indefinite amounts of data.
  2. Automate processes to enable an enterprise for getting an optimized view of all the bank accounts across multiple entities with system suggestions and recommendations.
  3. Use AI-based exceptional handling algorithms for reconciling an enterprise’s cash and APIs to obtain real-time cash positions.
  4. Leverage automated workflow-driven processes to manage, open, and close bank accounts and audit these processes annually by utilizing the latest bank structure and features.

Benefits of using centralized cash management software

If an enterprise’s cash management software frequently needs manual intervention to consolidate and aggregate data, then it leads to low cash visibility that hinders making data-driven decisions for the organization. With cash management automation, an organization can eliminate manual workflows and empower its team to concentrate on achieving strategic endeavors that drive value for the business.

Key features of HighRadius’ cash management solution

HighRadius’ cash management solution can help enterprise treasury by providing the following features:

  • Continuous global cash visibility: A single dashboard view of all the cash across all banks, regions, companies, and currencies improves cash utilization.
  • Automate repetitive tasks: Automated bank statement processing and reconciliation saves time, eliminates errors, and allows cash managers to focus on higher-value tasks.
  • Proactive decision making: Automated global cash visibility supplies users with vital information and enough time to make better investment and funding decisions.
  • Improved profitability: Informed and quicker acquisition or funding decision-making helps reduce interest expense or increase interest income.

Discover how cash flow management automation helps enterprises achieve granular cash visibility by scheduling a demo with our experts.

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The HighRadius™ Treasury Management Applications consist of AI-powered Cash Forecasting Cloud and Cash Management Cloud designed to support treasury teams from companies of all sizes and industries. Delivered as SaaS, our solutions seamlessly integrate with multiple systems including ERPs, TMS, accounting systems, and banks using sFTP or API. They help treasuries around the world achieve end-to-end automation in their forecasting and cash management processes to deliver accurate and insightful results with lesser manual effort.