Improve Your Cash Flow in a Remote World
Of all the business lessons we've learned in the last few years, maybe the longest lasting will be that we don’t always have to be in the office to work efficiently. In fact, sometimes things run more smoothly when we’re using technology to manage more of our daily tasks.
One place where businesses often lag in digitization is cash flow. Too many of the old processes rely on people being present to verify information or, heaven forbid, to sign checks and process pieces of paper to collect money and make payments.
If you haven’t already started to break from this tired tradition, it's time to catch up. The U.S. Postal Service says slower delivery times are now the norm, and an overwhelming percentage of businesses list digital channels as a top priority in managing their finances.
Plus, cash management technology is better than ever, and the advantages go far beyond remote work.
Security
Even if you’re not in the same room with your team, you can still have total control over money going out. Virtual cards bring all the security benefits of a physical credit or purchasing card, including restrictions on transaction types and amounts, but without the fear that it can be stolen. ACH and wire transfers allow for layers of approval, meaning your team can initiate a transaction and you as the leader will approve it.
With fewer paper checks floating around, the opportunity for fraud is greatly reduced. You no longer have to worry about counterfeit check payments or thieves stealing checks and bank information. With ACH, everything is done through a secure online portal you control, and with both ACH and wire, your bank will have built-in safeguards to verify your identity before anything gets processed. Remember this mantra to prioritize your payment types: Virtual cards first; ACH and wire transfers second; checks only if you have to.
Predictability
With old fashioned payments, you never know exactly when money will come in or go out. You’re forced to rely on the speed of the mail and the deposit habits of your vendors. Electronic payments let you know the exact moment money will move, giving you a lot of flexibility over how to structure your accounts. If you fund your operating account from a line of credit or an interest-bearing account, knowing exactly how much to move and when is enormously helpful.
Efficiency
Aside from the efficiency you get from eliminating paper checks, you can also automate many parts of your cash flow processes to save more time and effort. Accounts payable is a great place to start. AP automation systems will automatically capture your invoices, send them for approval by your staff and pay them according to preset dates and methods and route them to your staff for approval and payment. You determine the timing, amount and method of payment. Then it syncs with your accounting system to reconcile your accounts. Most companies use automated payables to precisely time payments (for predictability), eliminate paper checks (for security) and reduce the potential for human error (for even more efficiency). They also allow for multiple layers of access, giving the company’s leaders final control over all payments.
Even if you must accept paper checks, like a property manager or landlord, you can still make deposits remotely using your bank’s mobile app or remote deposit service. Some even allow you to outsource receiving, processing and depositing checks through lockbox services. While these have traditionally been reserved for very large companies processing hundreds or thousands of checks, more and more small businesses have found them to be convenient solutions to a time-consuming process.
Customer Convenience
Your customers have grown accustomed to digital channels just like you have, and their expectations for making payments have changed. Your large buyers will appreciate having wire and ACH options available, and your retail customers expect ecommerce and mobile payments.
Your company’s cash flow can be like a puzzle, with multiple pieces that need to fit together in a precise way for maximum benefit. Working with a trusted financial advisor, you can see how options like ACH, AP automation and remote deposit fit into your business plan.
Louis Soldano is a treasury management advisor at Pinnacle Financial Partners. He is based at the firm’s Campbell Avenue office in Roanoke, VA, and can be reached by phone at 540-769-8568 or by email at Louis.Soldano@pnfp.com.
