Businesses are expanding globally rapidly, seeking new opportunities and expanding supply chains. A key element in operating a successful and financially healthy enterprise is implementing effective cash flow risk management strategies. A positive cash flow is important for good financial health. Treasury departments require a single view of their worldwide cash situation to make informed financial decisions. 360-degree, transparent cash visibility will lead to accurate and reliable cash forecasting, prompt reporting, and optimal working capital utilization and help transition from cash preservation to cash excellence.
As treasury grows more complex, it requires technology beyond spreadsheets to ensure cash visibility and liquidity to manage intercompany balances and notional pools.
Here are the following reason for enterprises to switch from spreadsheets/TMS to automated cash management cloud:
Enterprises often have a large amount of cash flow data, making it challenging for cash managers to manage cash flows, especially using spreadsheets. For instance, logging into several bank portals, retrieving bank statements, manually matching items from bank statements to spreadsheet data, adjusting cash positions, and making appropriate cash transfers this individual task execution can result in data entry errors and a significant amount of time-consuming.
Businesses have data stored in disparate sources (ERPs, bank portals, FP&A systems, TMS) in different formats. Aggregating this data, execution, and recording of payments becomes a challenge for organizations using manual systems such as spreadsheets, leading to missed data on failed transactions.
A treasury management system (TMS) requires high upfront costs and huge IT involvement. TMS also requires frequent updates and upgrades, which works as a barrier to rapid deployment.
Security is a key concern when dealing with cash. Data theft and fraudulent transactions are quite likely, and they must be addressed strategically. Poor cash flow risk management can lead to inadequate threat tracking and increased financial loss risks.
Companies that deploy a TMS often overlook proper implementation practices, vastly underestimating the challenges and complexity. This results in their TMS project falling short of what they expected due to running out of time, going over budget, or simply getting overwhelmed.
Non-standardization and decentralization are frequently associated with poor cash management. This can lead to misinterpretation and erroneous reporting, among other issues. To look at it another way, poor cash management implies losing track of cash resources. As a result, identifying company trends and issues becomes more challenging.
The following are the top advantages of using cash management software:
Transparency is one of the most important aspects of cash management. Streamlined and automated processes allow businesses to access cash more quickly. Advanced cash management software enables real-time access to report data and account information. This visibility can help businesses make better decisions and manage and scale their operations more efficiently.
Cash balance visibility becomes a crucial driver for reducing idle cash. Leaving funds in a local account diminishes returns and prevents the cash from being actively available to the organization. This limits the optimal use of available liquidity and raises credit line use. Cash Management Cloud helps to track surplus/idle cash for treasurers to utilize idle cash for growth-related purposes or investments.
Companies must maintain an optimal cash balance to meet their day-to-day responsibilities. Cash management solution helps to track cash balances in various bank accounts, intercompany accounts, currencies, nations, and entities and automatically uploads regular bank reports for overall cash visibility and faster reconciliation.
Companies need to monitor cash flows regularly to reduce financial stress and increase financial security. Cash management software helps identify the regions and times when a cash deficit is possible. This allows the treasury to plan ahead of time by coordinating with various departments and avoid making reactive decisions that lead to overborrowing or penalties.
Controlling liquidity risks and engaging with cash and liquidity management are part of cash flow risk management. Businesses that have insufficient cash can face severe shortages. Automatic reconciliation with cash management software detects errors or fraud in transactions or payments for mitigating various treasury risks.
Speak with our solutions experts today to get rid of the hassles of manual cash management and take advantage of an automated cash management solution for your business.
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.