Cash Flow Management: The Benefits of a Data-Led Mindset

Written by Trovata Team
November 3, 2022

Do you trust your “gut” with cash management decisions?

Intuition—an instinctive feeling of knowing what decision to make—is given a kind of prestige in business culture. We take pleasure in stories of prominent business leaders who had a feeling about a decision and got it right. 

However, intuition is untrustworthy. It should be accompanied by critical thinking and careful data analysis.

Data-driven approaches to cash flow management are especially useful. Robust, up-to-date cash data enables greater transparency, better use of capital, quicker decision-making, and better insights into customer behavior. 

This article explains what a data-led mindset is, the benefits it can offer treasury and banking professionals, and how to build data into your decision-making to complement intuition. 

What Is a Data-led Mindset and Why Is It Important?

A data-led mindset is fundamentally about prioritizing data and analytics in your approach to making business decisions. Cash managers and finance professionals with a data-driven mindset build their decision-making around data and analytics. They intentionally use data to reduce bias, clarify thinking, and identify business opportunities. 

For treasury and finance, the foundation of a data-led mindset is banking data. Up-to-date, accurate data gives you a holistic view of your company’s cash position, allowing you to make the best business decisions on how to use your capital. 

Note that a data-led mindset doesn’t preclude using other factors in decision-making. Each decision can still involve consideration of the overall company strategy, company values, employee preferences, and, yes, even intuition. The critical factor is that a person using a data-led mindset will ensure relevant data is at least considered during the decision-making process. 

Key Benefits of Managing Cash Flow with a Data-led Mindset

The opportunities for a data-led mindset are as prominent in treasury and cash flow management as in any other business sector. Here are some of the key benefits:

Acting Proactively

Building a data pipeline that gives you full transparency into your cash management—a single source of truth for your cash position that the entire finance team can leverage. When you have this holistic view of your data, you can see threats and opportunities much earlier. That allows you and your team to take early action to minimize the threat or take advantage of the opportunity. 

Faster Decision-making

When you can access real-time banking data, you have full visibility into your cash position. You can spend less time gathering information and, instead, simply make decisions. 

More Confidence

Data is concrete in a way that intuition and gut feelings aren’t. They help remove some of the subjective elements of a decision. In turn, this can provide more certainty in your decisions. 

Time and Cost-savings

Perhaps the most significant benefit of building an automated data pipeline for managing your cash flow is that it saves time and money. Your team no longer has to log into your bank, download CSV files, and import them into your system. 

Who Is a Data-led Mindset for?

Who could benefit from a data-led mindset in cash management? It could be appropriate in many industries, including the following:

  • Banks and fintech companies. A data-led mindset led Square to develop a big data platform in concert with Trovata. The result significantly improved Square’s cash data quality, latency, and reliability.

  • B2B SaaS companies. By automating its cash management, GoTo achieved cash visibility across over 50 global bank accounts and saved more than seven hours a week.

  • B2C SaaS companies. A data-led mindset enabled Eventbrite‘s finance team to save 48 hours monthly. They now feel confident that their data is free from error and that their cash reporting processes are efficient. 

  • Retail. Orbus Exhibit & Display Group upgraded its cash data system to enable AI and machine learning algorithms. The company can now enjoy hassle-free access to data-rich cash forecasts and automate its cash management workflows.

  • Industrial Services. Emerald Expositions applied a data-led mindset when they used cash management systems to consolidate the data collection and cash reporting processes. The result was better insights from their cash data and ten hours a week saved by eliminating manual reporting.

How to Implement a Data-led Cash Flow Management System

A data-led approach to cash management is increasingly valuable. So how do you get there?

Invest in the Data Infrastructure 

To make decisions based on data, you must first access that data. That means creating a data pipeline—connecting to your data and extracting it, transforming and cleaning it, and loading it into your analytics tools. 

The old way of getting data was to pull files from disparate bank portals. But extracting data this way means that the data is out-of-date by the time you begin to analyze it. Old data makes it difficult for you to get a holistic view of your company’s cash position. 

Banks are now increasingly making cash data available through APIs. Modern treasury technology solutions, like Trovata, allow you to connect with those APIs and access your financial data in real time. When your data is up-to-date, you get the most accurate reports and forecasts to make the best possible decisions.

Get Buy-in 

Transitioning towards greater use of data will ultimately require some digital transformation. And that requires leadership buy-in. Foster support by ensuring your digital transformation projects align with your organization’s strategic priorities and confirming there is a clear business case. 

For inspiration, these company case studies provide examples of how organizations in several different industries obtained significant value from a data-led cash flow management system.

Provide Your Team Necessary Analytic Tools 

Once you have access to your cash data, you must use it to make decisions. That includes making your data visible, creating reports, and generating forecasts.  

Some tools make it easier to draw insights from your data than others. With Trovata, you don’t need advanced analytical skills. We’ve built AI and machine learning models into the product to remove a lot of that need. Your team just needs to be able to understand the automated forecasting models and decide which are best for your business.

Data Compliments Intuition to Produce Better Business Results

Treasury technology has advanced considerably over the past decade. The result is much better access to our data, which, in turn, helps us make better decisions.

That’s not to say there’s no room for intuition—there is. 

Indeed, they work together: Intuition can suggest a potential source of action, and you can validate that decision using data. Similarly, management intuition and experience remain critical for understanding the implications of data. Both are useful. 

But while your intuition is built-in, you must cultivate a data-led mindset needs. 

To adopt a more data-led approach to cash flow management, start by setting up the necessary infrastructure. Book a demo today to see how Trovata can help.

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