6 Reasons Why Your Enterprise Needs an Automated Cash Management Solution?

Introduction

Business leaders are increasingly recognizing the value of integrating automation and AI into their finance teams to drive tangible revenue gains.

HighRadius recently discovered that 41.2% of leaders attribute inefficiency in financial operations to outdated technologies and processes. As a result, improving cash management operations has become a top priority for many businesses. 

This post sheds light on why building your IT landscape with automation on top of your existing spreadsheets and legacy TMS models allows your business to go beyond merely preserving cash and striving for cash excellence.

The Trends Driving the Move toward Automated Cash Management

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 6 reasons for enterprises to switch from spreadsheets to a TMS:

Manual and time-consuming processes

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.

Disconnected multiple pieces of data stored across different systems

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.

High expenses and IT involvement of TMS

ATreasury 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.

Risk of fraud payment and FX risk

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.

Time-consuming implementation

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

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.

5 Benefits of Using Cash Management Software for Enterprises

The following are the top six advantages of using a cash management software:

Access to cash flow data more quickly

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.

Managing idle cash

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.

Calculating the Optimal Cash Balance

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.

Monitoring cash inflows and outflows efficiently

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.

Improved cash flow risk management

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.

Choosing the Right Cash Management Solution for Your Enterprise

Choosing the right cash management software for your enterprise requires careful consideration of several factors. Here are some steps to help you make an informed decision:

• Identify your specific needs: Start by assessing your organization’s cash management requirements. Consider factors such as the volume of transactions, cash flow forecasting, liquidity management, bank account reconciliation, payment processing, and reporting. Make a list of the features and functionalities you require in a cash management software.
• Evaluate scalability and integration: Consider the scalability of the software to ensure it can accommodate your future growth and evolving needs. Additionally, assess its compatibility with your existing systems and whether it can integrate seamlessly with your accounting, ERP, or other relevant software.
• Assess security and compliance: Cash management involves handling sensitive financial data, so security is crucial. Ensure that the software follows industry-standard encryption protocols, data access controls, and compliance with relevant regulations such as PCI DSS (Payment Card Industry Data Security Standard) or GDPR (General Data Protection Regulation).
• Consider user experience and ease of use: The software should have an intuitive user interface and be user-friendly for your staff. Consider their level of technical expertise and ensure the software offers ease of use, efficient navigation, and a short learning curve.
• Check for automation capabilities: Look for cash management software that offers automation features to streamline your financial processes. This may include automated bank reconciliations, transaction categorization, cash forecasting, and payment initiation.
• Evaluate reporting and analytics: Reporting and analytics capabilities are essential for gaining insights into your cash position, cash flow forecasting, and overall financial performance. Ensure the software provides robust reporting features and customizable dashboards to monitor key financial metrics.
• Consider vendor reputation and support: Research the vendor’s reputation and experience in providing cash management software solutions. Check customer reviews, testimonials, and case studies to understand their track record. Additionally, assess the level of customer support they offer, including availability, response time, and ongoing technical assistance.
• Request demos and trials: Request demos or trials of shortlisted cash management software to assess their functionalities firsthand. This will help you evaluate how well the software meets your requirements and how easy it is to navigate and use.
• Consider total cost of ownership: Evaluate the total cost of ownership, including upfront costs, ongoing maintenance fees, licensing, training, and any additional charges. Compare the pricing models and choose a solution that provides the best value for your investment.
• Seek input from stakeholders: Involve relevant stakeholders such as finance managers, treasury teams, and IT personnel in the decision-making process. Gather their feedback and insights to ensure the chosen software aligns with their needs and expectations.

By following these steps, you can make an informed decision and select the cash management software that best suits your enterprise’s unique requirements.

Why could HighRadius be your best choice to automate cash management?

HighRadius’ autonomous cash management software offers a comprehensive solution to streamline your treasury operations by eliminating manual spreadsheets and complex workflows. Seamlessly integrating with your existing systems, HighRadius automates cash positioning, liquidity management, and bank reconciliation, saving you time and reducing errors.

Our powerful analytics provide real-time visibility into your cash flows, empowering you to make data-driven decisions and optimize working capital. With robust security features and customizable dashboards, you’ll have full control over your treasury operations.

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.