Cash Flow Management: How CFOs Can Be More Effective

Written by Keegan Chamberlin
August 4, 2022

Many CFOs still struggle to manage cash flow due to a lack of visibility. Traditional forecasting and reporting methods have many limitations. As your company grows and transaction volume increases, these limitations become more pronounced. 

Let’s dive into the most significant roadblocks CFOs encounter when relying on traditional forecasting methods to drive decision-making.   

4 Reasons Why CFOs’ Cash Flow Management Is Not Efficient

1. Seasonality and External Trends

seasonality image
Source: Belkins

Business is not always constant. For many B2B businesses, the summer months are slower due to teams taking vacations. Many organizations don’t want to commit to a lengthy implementation that could disrupt their well-earned time off. And as platform providers, we shouldn’t expect them to.

Catching trends in advance that could negatively impact cash flow is difficult if your finance team has to collect and normalize transaction data across many bank portals. By the time a basic cash forecast is developed, it’s already outdated due to new bank data being available within portals. 

2. Rigid Forecasting Tools

The number one tool used to manage cash flow is Excel. While it is great for individual data manipulation, it doesn’t excel in crafting a 13-week forecast. It’s time-consuming, and as your business scales, it becomes less feasible. Spreadsheets naturally silo data due to being stored on local hard drives. The tech limits what you can do from an analytical perspective as it hinders your ability to forecast accurately.

cfo cash management guide

3. Lack of Actionable Information

A quarterly forecast is only as good as the data that flows into it. For example, while determining your DSO is great to track,  it doesn’t provide you with the level of detail needed to decide whether to sell to a particular client.

You need to understand the data driving cash flow management. Breaking it down can help you develop a cash strategy that fits your organization’s needs better.

4. Limitations Across Time, Team Resources, and IT Support

Significant limitations for finance teams are time, team resources, and IT support. Many teams struggle to make their resources work for their cash forecasting needs.  This leads to spending so much manual effort on report creation.

If your finance team is stuck generating reports and forecasts, they won’t have much time for strategic analysis.

Do you find your organization in a similar situation? If so, it’s time to consider new technologies and tools that equip your team to eliminate tedious tasks. Instead, provide them resources that help them focus on strategic analysis and identify trends that grow the business.

Technology CFOs Can Use For Strategic Analysis

1. Technological Growth In Retail Banking

cash flow management api

The next wave of digital transformation is occurring within banking. Some of the largest financial institutions have begun offering their clients unbridled access to their balance and transaction data via banking APIs. Third-party technologies access these to establish banking rails that send data directly to clients. This way, they can gain unified bank data in a single platform.

2. Cloud-Based Cash Flow Management Platforms

Cloud-based platforms built on banking APIs like Trovata empower financial teams to visualize cash better. These platforms use machine learning technology to generate powerful cash reports and forecasts. These can be placed on custom dashboards, enabling you to view the most critical reports anytime, anywhere. This level of transparency can help you better identify cash flow trends.

3. Platforms That Offer Powerful Product Integrations

Many of these cloud-based cash management platforms also incorporate powerful ERP integrations. These inbound integrations automatically pull in A/R and A/P data, empowering the tracking and management of payments. Also, any historical data found within your ERP can be compared against these platform’s data through reconciliation tools. This way, you can ensure your cash position matches in both systems.

4. Interfaces That Are Easy To Navigate and Use

cash flow management dashboard
Source: Trovata’s Cash Management Dashboard

Many treasury management and accounting systems still use technology created in the 90s. Navigation often is a bear, and custom reporting and forecasting is impossible without heavy IT intervention. Many of these cloud-based platforms have digitally transformed the user experience to be modern and easy to explore your data.

Any report or forecast in cloud-based platforms, like Trovata, can be drilled into to understand what data and assumptions are going into each report. And with a powerful mobile app, you can access your key dashboards anytime, anywhere.

Redefine Cash Flow Management With Trovata

Data is not valuable if you don’t know how to use it. There are better tools that provide you with richer cash insights.

Trovata makes it easy for businesses to automate cash reporting, forecasting, analysis, and money movement, empowering your organization with:

  1. Unified and Secure Bank Data. Gain worry-free access to the most up-to-date balance and transaction data across bank partners and accounts.

  2. Easy Exploration and Analysis. With Google-like search, beautiful reports, robust forecasts, and easy navigation, facilitate better data-backed decision-making.

  3. Cloud Native Innovation. Gain rich cash flow insights anytime, anywhere with an API-first solution backed by global banks. Reap the rewards of a platform that continuously delivers new, easy-to-use features.

  4. Implementation with No IT Required. Gain complete visibility into cash flow in weeks, not months. 

Learn how to lead the implementation of better cash flow management practices through digital transformation. For more information, read our latest resource: A Strategic CFOs Guide to Digital Transformation.

cfo cash management guide

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