Use Smart Treasury Management To Support Healthy Cash Flow
June 22, 2023
Many business owners have heard the rule of thumb that companies should have three to six months of operating expenses available in cash. However, that rule allows for a great deal of variability. To make the most of your company’s liquidity, you may wish to take a balanced approach, beginning with smart treasury management strategies.
Just like your business, your treasury management plan should be unique, tailored to your specific needs and opportunities. An engaged relationship banker will work with you to establish strategies to improve efficiencies in your company’s payables, receivables and information reporting.
Keep tabs on information and liquidity
With the latest digital solutions, cash management can be straightforward — and conducted anywhere, any time, on any secured device. Applications like mobile and paperless banking, which include convenient reporting features, have become standard for many companies.
Products that use Applications Programming Interface (API) technology are also becoming standard in many industries. Through APIs, systems communicate to provide the real-time, seamless experiences we’ve grown to expect (think Uber and apps that track a package’s delivery minute by minute). For businesses, products using API infrastructure can “talk” with your accounting system to keep you up to date on current balance and transaction reporting at all times.
Managing accounts payable
Today, vendor payments are arguably more complex than ever. Vendors may request payment by check, ACH, credit card, API (like QuickBooks Payments) or other methods. Managing these various methods efficiently and reliably can be a resource drain for growing businesses. In response, more business owners opt for digital solutions that automate the entire AP process.
Your banker might recommend:
Integrated payables to create one automated procedure that consolidates payment instructions from multiple channels.
Commercial credit cards that automate payments, simplify invoice reporting and effectively provide a “float” of 25-30 days.
Same-day ACH payment origination to securely send payments and control cash flow — especially for small transactions that are more time-sensitive than traditional ACH payments.
Treasury management tools can speed up the deposit of funds your business receives so that your money goes to work for you right away. For example, remote deposit capture can expedite fund collection by scanning checks and depositing them into your bank account electronically. And specialized sweep accounts can automatically move your money to earn maximum interest, be prepared to pay bills or improve liquidity.
If your business offers consumer-facing services or receives frequent, direct payments from customers, ACH debit origination, mobile deposit or flexible point-of-sale merchant service solutions might help you receive payments more efficiently. These services and more are designed to save time and money in your AR process.