Accurate and timely cash flow visibility is the key to financial success in any organization, as it helps treasury by:
According to a survey by Strategic Treasurer, only 70% of enterprises have either real-time or daily cash flow visibility into their bank accounts. And the rest 30% are visionless into the opportunities and challenges ahead of them. Enterprises that have high global visibility can significantly enhance cash flow forecasting and risk modeling. Improving global cash flow visibility enables enterprises to escape late borrowing and late payment fees or invest proactively for growth.
Whether treasurers are looking for external borrowing or optimizing ROI, the foremost step is to have a detailed knowledge of available cash. But, treasurers also require the right tools to help them forecast future cash flows and keep the right people informed. Achieving high cash flow visibility is challenging if an organization is complex in its structure and also widespread geographically. Many enterprise finance departments uphold numerous bank relationships, so they require cash flow management automation to gather and store the bank data automatically and in one place for easier data access. However, the common challenges in gaining cash flow visibility are:
Companies that handled cash wisely before the pandemic, stayed resilient during that volatile situation whereas less-prepared companies faced threats of cash crunches or bankruptcy. Since the pandemic, treasury teams have been doubling down on cash flow visibility for improving cash flow forecasting and working capital management. These functions have always been the treasury’s top priority, but getting them right throughout 2020 and 2021 has led organizations to improve their decision-making process. CFOs are using this current situation as an opportunity to concentrate on endurable cash excellence, supported by a strong cash culture in the form of a bottom-up forecasting approach. This leads enterprises to be more resilient during a volatile situation and also stay ahead of the competition.
Centralized cash management leads to effective management of cash flows and liquidity in an organization. Leveraging centralized cash management helps enterprises to maximize returns on invested capital and also prevent the risks that can affect the company. The key benefits of centralized cash management software are as follows:
Manual workflows prevent treasurers from gaining granular visibility into their cash flow position. Many treasurers are still relying on traditional TMS, and manually downloading statements and importing the recent transactions into the TMS and ERP. Centralized cash management software connects seamlessly with all banks, ERPs, and independent market data sources to process files in all formats including BAI2, MT940, ISO20022, XLS, and CSV by:
Every company’s best interest is in utilizing its cash flows efficiently. Netting and cash pooling are the two ways that enable enterprises to optimize liquidity planning and management efficiently.
Cash pooling is the short-term cash management process of consolidating liquidity within one company. Here enterprises deduct funds from cash surplus entities to provide intercompany loans to entities that are cash deficit.
Netting neutralizes pending accounts payables and receivables between two parties and consolidates them in one payment. And it also reduces settlement and any other financial risks between two or more parties.
Data analytics provide useful insights into areas including customer behavior, the competitive landscape, and internal processes. If data analytics are used correctly then it can drive growth strategies and also guide as to where investment is most required.
Real-time cash flow visibility supplies the financial data analytics that can help enterprises determine risk factors to enhance and enrich business processes, and determine whether an organization’s investments are concentrating on the most relevant areas.
Real-time cash flow visibility helps treasury to:
HighRadius’ cash flow management automation solution can help enterprise treasury by providing the following features:
With real-time cash flow visibility, enterprises can gain detailed insights into end-to-end transaction metrics. With tools like cash management automation, enterprises can easily get a dashboard view of all the information in a single source to make proactive business decisions. Discover how cash flow management automation helps enterprises achieve global real-time cash flow visibility by scheduling a demo with our experts.
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.