Employee reviews invoices on laptop.

March 09, 2018

6 Tips For Automating Your Cash Flow Management

Many small business owners devote extensive time and energy trying to manage and speed up accounts receivable and accounts payable. Their time can be better spent sealing business deals and bringing in new clients.

“What many are learning is they can operate more efficiently if they automate their cash flow, freeing-up their leaders to explore new markets and take the company to the next level," said Omar Loya, manager of treasury product management at City National Bank.

What to Look for in an Automated Cash Management System

Online platforms that link bank accounts to accounting software, such as Quickbooks®or NetSuite®, can help eliminate the need to do double-entry for invoices and streamline the process of paying vendors and getting paid by clients, Santaniello said.

When deciding to automate your cash management system, there are a few key elements to look for to ensure you're making a worthwhile investment.

Easy-To-Use Software

Seek out a software that has an intuitive, user-friendly financial interface that is easily accessible from mobile devices. It should integrate with your accounting software and allow you to view transactions in various phases of processing and approval.

“Even a small thing can be a great help, like having easy access to the company's cash balance on an online dashboard," said Frank Rojas, regional sales manager at City National Bank. Because accounting employees often start their workdays by checking that balance, "the dashboard becomes a gateway into figuring out if they need cash or if they have excess cash, and it sets the agenda for what they need to do from there."

Electronic Deposits

Scanning checks to deposit them in your account electronically ensures that your business has access to the cash you need when you need it.

“Small businesses may have a pretty slim cash margin to deal with," said Loya. “The ability to automate a deposit can allow a business to receive money faster and have cash on hand to pay their obligations sooner, preserving good relationships with their vendors."

Visibility into Transaction History

Quick and easy visibility into transaction history for specific vendors as well as on an aggregate “big picture" level gives you the ability to run reports for auditing purposes and request customized reports for specific needs. Because these insights could help you identify areas where spending could be better monitored or areas for potential business growth, this is extremely important for all business owners to have and review regularly.

Transaction Matching Capabilities

Another feature to look for is transaction-matching. This capability shows which transactions have cleared your account and compares them to a list of approved payments. The matching process must be completed on a daily basis and analyzed for any discrepancies to avoid financial losses. Automating this process not only saves a substantial amount of time, but it also reduces the likelihood of error that is common with manual entry.

Fraud Detection

When you're looking at options, ask about the safety and security of services provided. You want to ensure your business - as well as your employees, partners and clients - are protected.

Fraud detection features help employees to confirm that a check has been cashed by the payee - and for the correct amount. If something isn't right, under certain circumstances the business can elect to not have an item paid and have its account credited.

Security functions, like requiring a payment approver to use a passcode, are designed to help keep fraudsters from accessing the company's banking services and emptying its bank accounts.

Variety of Payment Options

The ability to easily select bills to pay, schedule payments and choose a payment method, such as check, ACH or wire transfer, can help stop minor inconveniences from turning into major disasters.

Small companies often have one person handling accounts payable. If that person is out sick or forgets to send that week's accounts payable file in advance of the due-date, vendors won't be paid.

Automated cash management can save the day with a well-timed same-day ACH or wire transfer payment. The system sends an email alert that a payment is awaiting approval online. The approver can then log in via mobile phone or tablet and click “approve" from almost anywhere in the world.

Personalized Assistance

Make sure that your bank or service provider is equipped to provide quick, high-quality assistance with your questions or service issues. When technology fails, or you need further assistance, it's crucial that your business has access to the assistance it needs to keep operating efficiently.

When thinking about automating your cash management, you should also consider how to improve your accounts receivable collections.

Maximize Your Cash Flow and Make Incoming and Outgoing Payments Easier

We can help you optimize your cash flow cycle so you have the funds you need to grow your business. Fill out the form below to get started.

This article is for general information and education only. It is provided as a courtesy to the clients and friends of City National Bank (City National). City National does not warrant that it is accurate or complete. Opinions expressed and estimates or projections given are those of the authors or persons quoted as of the date of the article with no obligation to update or notify of inaccuracy or change. This article may not be reproduced, distributed or further published by any person without the written consent of City National. Please cite source when quoting.

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