Easter Eggs on Cash Optimization

Introduction

It’s Spring time, and with that comes the season of renewal and growth. Just like the Easter Bunny who diligently collects and manages his eggs, corporate treasury managers must also carefully manage their company’s cash to ensure growth and success. With the flowers blooming and the sun shining, it’s the perfect time to take a fresh approach to cash management and optimize strategies for maximum efficiency. 

Discover all the Easter eggs on cash optimization through this blog. 

Breaking the Barriers to Cash Management:

Getting Rid of the Rotten Eggs 

Imagine baking a delicious holiday pie only to discover a rotten egg in the mix- you’d quickly toss it out to preserve the flavor. As a treasury manager, you don’t want any rotten eggs in your basket to spoil the finances. That’s why it’s essential to identify and address the obstacles that hinder the process to optimize cash management. Let’s take a closer look at the common challenges in cash management:

1. Inadequate availability of real-time data: Treasury managers need to have accurate and up-to-date information about their cash positions to make informed decisions. However, they may face bottlenecks in accessing real-time data due to delays in transaction processing or inadequate data integration across different systems.
2. Ineffective communication or collaboration: Poor communication between treasury and other departments can lead to cash management issues. For example, if sales and operations are not communicating effectively with treasury, there may be a mismatch between cash inflows and outflows. Additionally, the treasury team needs to get in touch with cross-functional teams like A/R, A/P, HR, etc. Any delay in collaboration can affect data gathering and reporting.
3. Lack of oversight into cash positions: One of the primary challenges in cash management is the lack of visibility into cash positions across multiple accounts and entities. This can make it difficult to manage cash flows and take informed decisions, leading to missed opportunities.
4. Subpar bank account governance: The inability to track all your bank data and signatories can not only affect record-keeping and reconciliation but also lead to increased overdrafts or insufficient use of funds, delayed payments, penalties, and also damaged relationships with suppliers.
5. Delayed or erroneous reconciliation: Traditional cash management processes, such as manual reconciliations, can be time-consuming and error-prone. This can result in incorrect financial reporting and missed payments. Moreover, anomaly detection can become difficult due to inability to map transactions with bank statements, which can lead to an incapability to identify fraudulent activities.

Treasury processes can be only as good as the practices followed and the tools leveraged. In the next section, we have cherry-picked some effective methods to help CFOs in effective cash management.

Selecting Best Practices for Boosting the Bottom Line:

Unwrapping the Best Candies for your “Golden” Egg

Choosing the right strategies can lead to a sweet payoff for your business by helping increase the ROI. Outlined below are optimal ways for CFOs to raise the dollars through effective cash management:

1. Streamline data acquisition: Just like playing scavenger hunt during Easter, where both speed and easy access makes you win the game, CFOs need easy and faster data access to make timely decisions to stay ahead of their competitors. RPA helps with accurate and rapid data collection from multiple bank accounts, systems, and spreadsheets. A single source of truth and dashboards helps visualize cash position and achieve global cash flow visibility.
2. Strengthen collaboration: Don’t you love connecting with your family during festive seasons? And, if they live overseas, technology eases communication. Similarly, to collaborate effectively, cloud platforms allow different treasury personas and other departments to transfer and access cash flow data faster to ensure the efficacy of the data. This helps avoid data redundancy, enhances data quality, and builds team efficiency.
3. Centralize bank account administration: Wouldn’t it be fun if a robot could prepare an Easter dinner automatically, without you needing to sweat it out in the kitchen? Similarly, if a business has smaller treasury teams, assembling data from multiple banks can be tedious. Hence, CFOs should consolidate all bank accounts and transactions under a central system to improve efficiency and minimize risks. Also, they should establish standardized processes for opening and closing bank accounts, updating signatories, and executing transactions.
4. Digitize reconciliation of statements to transactions: Selecting gifts for your family can be time-consuming. And if you mistakenly get a name wrong, you might not send the planned gift to someone. Don’t make this mistake with your bank statements! With automated tools, matching cash transaction data with bank statement reconciliation for the current day or a previous day becomes simpler and quicker. This helps resolve discrepancies early to ensure accuracy and consistency in financial records.

All of the points can be executed with a single software- Explore how an automated cash management tool can help CFOs win the quest of digital transformation and cutthroat competition to squeeze out maximum yield. 

Role of Cash Management Software in your Pursuit of Improving Profitability:

Hopping into Action to Stay Ahead of the Competition

To be as swift as an Easter bunny, your organization, too, needs to be agile and efficient in succeeding in today’s competitive market. Hatching a plan for the financial success of your organization this Easter? With the right cash management software, CFOs can streamline their financial processes to make informed decisions. Discussed below are some of the ways cash management software can strengthen your company to increase profitability.

1. Unified data assimilation: The HighRadius Cash Management Software interacts seamlessly with banks, which allows bank files to be imported and instantly populates market data, transactions, and other crucial details for multi-currency cash positions. It can also process files in a variety of formats, including XML, BAI2, MT940, XLS, and CSV, and adjust holidays and exchange rates to provide real-time data. 

   

2. Enriched cash flow tracking: With the help of the solution, businesses can monitor all of their cash balances across all of their bank accounts, currencies, companies, account groupings, and time horizons in a single source of truth. The minimum and maximum balances for money transfers can also be set, and users can drill down into transactional details for actual, mirrored, and notional bank accounts.

   

3. Accurate short-term cash positioning: The solution provides information on short-term liquidity and cash needs and displays extra cash reserves that are available for investments. Additionally, it provides fully customized cash position worksheets that are linked to numerous internal and external sources.
4. Automated reconciliation of bank statements to cash transactions: The cash flow management software automates the reconciliation of current-day or prior-day bank transactions with cash transaction entries. In addition, it identifies and flags unreconciled transactions and outstanding items for exception handling.

   

5. Simplified bank account management: It tracks and manages a complete list of all bank account information and signatories and allows for bulk import, editing, and updating as necessary. Moreover, it tracks approval limits for different signatory groups and types.

   

Easter Nuggets with HighRadius’ Cash Management Software: A Customer Success Story

A $10M manufacturing company faced the following challenges:

1. Put in a lot of manual effort due to inability to integrate with the sources.
2. Had no visibility on where the funds were and how much funds they had.

They desired the following changes in their workflow:

1. Robust automated process before they grew further.
2. Better visibility that enabled them to plan better.

With HighRadius Cash Management Software, they were able to acquire the following benefits:

1. End-to-end automation for repetitive tasks to focus on strategic initiatives.
2. Automatic integration of bank and ERP data into the cloud to get real-time data.
3. Continuous global cash visibility across currencies, entities, and geographies.