Top 4 Tips for Strengthening Your Cash Flow Management Strategy

Written by Keegan Chamberlin
November 10, 2021

Our world has been in a technology boom the past two decades. With the unveiling of the first smartphone in early 2007 with the first iPhone, our world has become more digital, bringing about a new tech revolution.

Fast-forward to the present day, everyone has an appetite for speed and convenience. Whether it is entertainment, shopping, or productivity apps, consumers expect to have instant access to their favorite services. The same cannot be said within the treasury space. 

To this day, treasurers have had to struggle to gain a complete picture of their cash flow with technology that has been around since the 1980s. That technology being traditional treasury management software.

Their analysis is limited because manual intervention is often required to gain their cash flow and position for a particular time frame. And this required manual work can be time-consuming, meaning by the time you’ve consolidated and normalized your bank data, you are making predictions on outdated data. 

Thankfully, automated cash management platforms are designed to remedy this problem. With advancements in open banking APIs, these platforms, like Trovata, are empowering treasuries to eliminate tedious, manual workflows, reduce the potential for human error, and perform rapid, strategic decision making with true cash visibility.

With these top 4 cash flow management strategies, you can enable your team to increase cash management efficiency and equip them with the information needed to accelerate your strategic initiatives.

1. Gain True Cash Visibility by Establishing a Single Source of Truth

Manual workflows are what prevent many treasuries from gaining true visibility into their cash flow and position. For treasuries still relying on traditional TMS, manually downloading statements and importing their most recent transactions into their TMS and ERP is still the norm, but it doesn’t have to be.

Trovata’s open banking APIs establish a direct connection to your multitude of bank accounts, creating a big financial data pipeline that provides transaction and cash data to Trovata’s data lake. For the first time ever, treasurers can now leverage high-quality cash insights on-demand. 

Pairing open banking API technology with Trovata, your organization can now access a data lake that stores all your cash and transaction data. Machine learning algorithms analyze this data and display it in a data visibility layer, empowering you with a comprehensive suite of automated cash reporting and forecasting functionality.

You are in control of your data with a data lake built to be a single source of truth. Trovata’s GridMode™ truly encourages you to self-serve data whenever you need it. With any search, report, or forecast available in Trovata, the data can be exported for further custom analysis in LogMeIn’s spreadsheet of choice.

2. Create a Contingent 13-Week Forecasting Model

Making assumptions on former trends won’t give you a granular view of your cash flow.  Thus, you won’t have the accuracy necessary to create a forecast model. Developing dynamic 13-week forecasting models will help you get a better grasp on the timing involved of your cash flow and creates a cadence for identifying potential issues.

An accurate 13-Week Forecasting Model will help you better identify cash flow issues, especially during market swings. Creating contingent models using actionable insight will assist you in better monitoring your cash flow, and make smarter business decisions based on forecasted scenarios. But, when you resort to creating your 13-week cash forecasts manually, you are limiting your ability to discover rich, valuable insights into your business’s, vendor’s, and partner’s cash flows.

Trovata amplifies your ability to create contingent 13-week cash forecasts with enhanced user defined growth rates and variables. Whether you are forecasting an increase or drop in sales, or many other scenarios, Trovata gives you the flexibility to model and forecast around different business decisions and potential investment opportunities. As treasurer, you need a 360-degree view of cash peaks and valleys.  Greater clarity enables you to develop contingency plans to adapt to market fluctuation and quickly make more informed, data-driven decisions.

3. Understand the Story Behind Your Cash Flow

Reporting and forecasting is just one essential element of making better business decisions. Treasurers must articulate the difference between forecasts and actuals to key decision makers to truly take advantage of the cash insights they gain from automated cash management.

Reporting and forecasting your cash flows and performing variance analysis is just one element that will help you manage your working capital, identify and plug gaps, and locate cash burners. Visuals are powerful; when you create your numerical narrative, you will be able to display the difference between your forecasts and actuals, and explain the underlying story behind the changes to key decision makers.

Communicating the ‘what and why’ means investing quality time understanding and speaking to how changes in your cash activity drive the results and how they align with key business objectives. What may have been cryptic to decision makers suddenly becomes crystal clear, and they will have the confidence needed to make the next move.

4. Focus on Nurturing Your Relationships with Bank Partners

In this age of recorded greetings, it is always a breath of fresh air when you actually get to speak with a human – even at banks.Bankers are diligently trying to differentiate themselves from their competitors. Thus, they are eager to build relationships. Believe it or not, bankers are humans with listening ears. So be sure you inform them of your strategic objectives, so they can best help you accomplish them.

Nurturing Bank Partnership Best Practices:

  • Treat it as a real relationship, not a transactional relationship. Your bank partners are ready to assist you in better managing your cash flow. They can guide you in opening potential lines of credit, reduce lending fees, and help ensure that you are “cash ready.” Discover what options they can make available to you so, as a treasurer, you can make the best financial decisions for your organization.
  • Overcommunicate your intentions to your bank partner. Banks have a growing list of clients like you. But by being proactive, and building a relationship, you can feel confident they will stay engaged and work to meet your needs.

  • Share your strategic objectives and forecasts. Your bank partners can only help if they know exactly what your objectives are, as well as what potential threats you face. If you provide them with these insights, they will be able to help you craft contingency plans to best handle any risk that may arise.

Get The Pulse on Your Company’s Lifeblood

Cash is your company’s lifeblood, and you want to make sure you have the right analytic tools to ensure it is being managed properly. If your legacy treasury management system often requires your manual intervention to consolidate and normalize data, you are potentially missing out on a wealth of cash insights that could help you support your organization make better, data-driven decisions.

Discover how you can automate your cash flow management and achieve true cash visibility by scheduling a personalized demo with one of our cash automation experts. By automating your cash flow management, you can eliminate manual workflows and empower your team to focus on achieving strategic initiatives that drive value for your business.

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