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7 major benefits of a business cash flow management software


Read this ebook to learn the importance and key benefits of using cash flow management software.

Contents

Chapter 01

Major benefit of CM software

Chapter 02

Seven benefits of using a business cash flow management software

Chapter 03

Summary
Chapter 01

Major benefit of CM software


Challenges faced without a cash management software

  • Poor liquidity: Without a cash management software, it is difficult to track
    available cash. If a company falls short on cash, they may be forced to rely
    on loans or make late payments to vendors and banks. Late fees for utilities
    or debts may be incurred as a result. Late payments may damage the
    company’s credit score, making it more difficult to obtain credit account
    privileges and loans in the future.
  • High resource costs: Maintaining cash flow involves a variety of
    operations, including accounting fees, advertising, insurance, interest,
    legal fees, labor costs, rent, repairs, supplies, taxes, phone bills, travel
    expenses, and utilities. And performing this operation without cash
    management software requires the use of a large amount of human
    resources due to the manual activities.
  • Poor decision making: Poor cash management can lead to a lot of
    problems, including confusion and inaccurate reporting. In other words,
    poor cash management causes treasury to lose sight of their cash assets.
    As a result, it may be more difficult to spot business trends and issues. This
    makes allocating a budget and making sound business decisions much
    more difficult.

Cash management software is used to track, reconcile and report corporate
cash flows. The solution is particularly beneficial for managing cash flows
across multiple company branches, including international ones, as well as
companies that have complex bank account structures. Firms can keep an eye
on the current ratio and the quick liquidity ratio when planning to operate,
invest, and finance cash activities. Opening, registering, changing, and closing
bank accounts can also be done with cash management software. Moreover,
account signatories can be added, changed, and authorized.

Chapter 02

Seven benefits of using a business cash flow management software


The following are the advantages to using a business cash flow management software:

    1. Dashboard for high cash flow visibility:
    The ability to connect to all bank accounts, loans, and even
    superannuation accounts allows for a quick financial overview. The cash
    management system keeps track of inflows and outflows and makes data
    accessible easily.

    2. Expenses categorization:
    Categorizing the expenses helps in keeping the business organized, and
    helps in budgeting and determining which expenses can be deducted
    from the taxable income while paying taxes.

    Cash management software allows managers and treasury teams to
    easily tweak processes and policies as needed. Furthermore, all payment
    request data is stored in a secure, unified cloud, making it simple for
    treasury teams to keep accurate records and access them quickly.

    3. Budget tracking and cash positioning:
    The software helps in the forecasting of a company’s cash flows over a set
    period of time. This could be useful for keeping a budget for a week, month,
    quarter, or year. The budget is used to determine whether the company
    has enough cash to continue operating over the specified time period.

    4. Effective decision making:
    A cash flow management statement contains sufficient information about
    the company’s income and expenses. Treasury can determine the cash
    balance in the company account by analyzing these statements with a
    cash management system. Early determination of this cash balance aids
    in determining whether the organization’s financial situation is stable,
    excess, or deficit. This allows treasury to make better decisions.

    5. Ease in making payments and reconciling payments:
    Payment reconciliation is a bookkeeping method that compares internal
    financial records to bank statements to ensure that the accounting is
    correct. Cash management software assists in automatically matching
    data on cash transactions provided in daily/weekly/monthly bank
    statements with those recorded in the expense tracking.

    6.Time savings:
    Cash flow management software is extremely useful for planning and
    coordination. This software uses RPA and API, allowing treasurers to focus
    more on strategic and high-priority tasks by gathering real-time data
    from banks and consolidating it into a single place.

    7. Better inter-company lending:
    Due to a lack of proper record management, analysts may be unable to
    respond to customers on time. In an environment where manual
    processes are used, collecting data from various departments and staying
    on top of ongoing collection activities is difficult. Cash management
    software helps to automatically capture intercompany activities, track
    balances, and record interest across all mirrored and notional
    bank accounts.

Chapter 03

Summary


Here are the reasons for businesses to leverage a cash management solution:

  • Cash utilization is improved when the treasury team has a single
    dashboard view of their cash across all banks, regions, businesses,
    and currencies.
  • Bank statement processing and reconciliation that is automated saves
    time, eliminates errors, and allows cash managers to focus on
    higher-value tasks.
  • Global cash visibility gives treasurers access to critical data and gives
    them more time to make better investment and funding decisions.
  • In user-defined worksheet templates with transaction-level drill-down
    capability, treasurers/ treasury managers can check real-time cash
    positions across bank accounts, companies, pools, and currencies.
  • The treasury department can create cash or intercompany transactions
    and then explore them using advanced search functionality.
  • It is easier to auto-reconcile transactions using standard and
    user-defined tagging rules, with rare exceptions reconciled manually or
    automatically.
Chapter 01

Major benefit of CM software


Challenges faced without a cash management software

  • Poor liquidity: Without a cash management software, it is difficult to track
    available cash. If a company falls short on cash, they may be forced to rely
    on loans or make late payments to vendors and banks. Late fees for utilities
    or debts may be incurred as a result. Late payments may damage the
    company’s credit score, making it more difficult to obtain credit account
    privileges and loans in the future.
  • High resource costs: Maintaining cash flow involves a variety of
    operations, including accounting fees, advertising, insurance, interest,
    legal fees, labor costs, rent, repairs, supplies, taxes, phone bills, travel
    expenses, and utilities. And performing this operation without cash
    management software requires the use of a large amount of human
    resources due to the manual activities.
  • Poor decision making: Poor cash management can lead to a lot of
    problems, including confusion and inaccurate reporting. In other words,
    poor cash management causes treasury to lose sight of their cash assets.
    As a result, it may be more difficult to spot business trends and issues. This
    makes allocating a budget and making sound business decisions much
    more difficult.

Cash management software is used to track, reconcile and report corporate
cash flows. The solution is particularly beneficial for managing cash flows
across multiple company branches, including international ones, as well as
companies that have complex bank account structures. Firms can keep an eye
on the current ratio and the quick liquidity ratio when planning to operate,
invest, and finance cash activities. Opening, registering, changing, and closing
bank accounts can also be done with cash management software. Moreover,
account signatories can be added, changed, and authorized.

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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.