Managing cash flow is an integral part of business operations, and the right services make a big difference in the long run.
A company’s financial stability relies on effective and efficient cash management and the overall, long-term success of a business is heavily dependent on these kinds of financial services. A financial institution, like Bank Midwest, are well versed in pairing business needs with relevant and useful services.
Let’s take a closer look at what cash management is, and what kind of services can help enhance your company’s finances.
What is cash flow management?
Every business has cash flow, which refers to the total amount of money being transferred in business, both in and out. Cash flow management is the process of ensuring that the cash flows support the business and are appropriate for the company’s long-term profitability.
Even with a robust internal financial team, the business will likely need to outsource to cash flow management professionals. Cash and treasury management services help leaders establish a firm understanding of how much working capital (a company’s current assets minus current liabilities) they have to use.
Cash flow
At any given point in time, businesses have many different cash inflows and outflows. From paying obligations, bills and other necessities, cash leaves the business in quite a few ways. Similarly, a good business should bring in sufficient cash to maintain operations. Both of these processes are known as cash flow. When well managed, planners should ensure enough liquidity for future payments. Ultimately, the basic goal is to have a relatively stable, financially sound business. Cash management solutions help businesses maintain healthy habits and find ways to improve.
A cash flow statement is a list of the inflows and outflows that occurred in a specific period of time. Frequently, stakeholders and other interested parties will receive a copy of the cash flow statement for transparency reasons, usually on a quarterly basis. In order to make an accurate statement, cash flow must be tracked every day. This is where automation technology can be implemented and used, something we will touch on a little later in the article. In the end, a cash flow statement will help the business understand how much capital it has readily available and assist with liquidity management.
Online cash management services
There are many different types of cash management services available, depending on the particular needs of your business. Here are some of the most popular and commonly used cash management services, offered by the vast majority of banks for business online banking.
Direct deposit
Direct deposit options are an example of automation that works to take care of simple tasks, freeing up the valuable time of your employees. This option saves time by automatically processing payroll checks, and saves money by eliminating the need for postage. Additionally, your staff will receive their pay more quickly. The file upload feature allows users to upload properly formatted NACHA ACH files generated from their existing payroll or accounting software.
Have questions about a previous pay period? You can access payroll and tax reports online with a click of a mouse, securely locked behind passwords and other security measures. Due to these features, the possibility of lost or stolen checks decreases dramatically. This is a very common service, with 93% of workers receiving their pay through direct deposit as of 2019.
Fund transfer
Transferring funds is easy when done digitally. Now, you can transfer funds quickly and easily track each transaction’s destination and the frequency with which this action is taken. You can move your money where you need it, when you need it. Not only can you make payments faster, but you can also receive them just as quickly. This keeps your cash flow accurate and makes it so that you don’t have to wait for a payment to hit your company’s account. In addition, digital transfers make it simple to pay merchant services and your company’s federal taxes.
Security measures
As previously mentioned, cash management services offer a high level of security, which is extremely valuable to most businesses and their staff members. Note that cybercrime costs financial services $18.5 million annually, so relying on financial technology professionals and robust digital security is well worth it. Bank Midwest offers all of the following services:
- Email or text alerts for business account balances and sweep alerts, meaning you’ll know when the money needs to be routed more than one way, for multiple users.
- Stop electronic payments, to easily halt payment of one or a range of checks.
- Positive Pay helps prevent fraud by identifying when a questionable Automated Clearing House (ACH) is made.
- Dual control authorization, which can be enabled for all wire and ACH transfers.
- Multi-user access, with varying levels of access.
Why cash flow is important
Effective oversight of cash flow is an extremely valuable component of business management. Without the benefits of strong cash flow management, a business’s chance of making it in the long term can substantially decrease. Just as with personal finances, business finances require a strict eye to maintain accurate and functional cash inflows and outflows. Reconciliation can identify redundancies and uncover unnecessary spending.
From big corporations to small businesses, every company should use cash flow management services to their advantage. Not every solution will be the same, and you should have a conversation with your business banking professional to learn what will work the best for your business’s long-term goals. Gain back control of your working capital and maintain upward growth by utilizing cash management services.
Bank Midwest offers online Cash Management services and our team would be happy to answer your questions.