Cash Management Strategies: Avoid a Cash Flow Crisis

Written by Trovata Team
September 30, 2020

Businesses across the country have felt the financial impacts of COVID-19. With social distancing restraints and the looming threat of a resurange it has become imperative that businesses strengthen their cash management processes to avoid a cash flow crisis. To combat the unpredictability associated with operating a business amid a pandemic, business owners should focus on monitoring and forecasting cash flows, incorporating scenario planning, increasing cash visibility and maintaining strong relationships with lenders.

cash management strategies

What Can Businesses Do To Mitigate The Risk Of A Cash Flow Crisis?

  1. Cash Flow Forecasting

One of the most important steps a business can take to combat unpredictability is to strengthen their cash flow forecasting process. Cash flow forecasts help a business predict and prepare for potential cash shortfalls. When the forecast predicts a potential cash shortage, business leaders then have time to evaluate their cash flow and take corrective action. This could include anything from recalibrating payment and collection strategies to liquidating assets and reaching out to lenders. Not sure how to start forecasting? Check out our simple cash forecasting template.

In addition to a cash flow forecast, business leaders can leverage scenario planning as a tool to combat a cash flow crisis. As Oracle explains, “When everything is uncertain, we need to plan for multiple outcomes. This is where scenario planning comes into play. It can help us visualize the future, model a range of potential outcomes, and help you decide how to respond to each one.” Scenario planning can be used to help businesses plan for all outcomes by modeling out anything from the effects of potential COVID guidelines to a resurgence in cases.

  1. Cash Positioning and Cash Visibility

“To manage and control cash, you will need clear visibility into the operations that generate and affect your levels of cash on hand.” –Treasury & Risk

A cash position is a snapshot of cash flow at a specific point in time. Manual cash positioning is a tedious process that requires logging into multiple banking portals, as well as aggregating and normalizing cash data. The gap between the original collection of cash data and the consolidated cash position is called the visibility gap.

The visibility gap leaves cash managers guessing at their daily cash position. Not having a solid understanding of how much cash is on hand leaves businesses susceptible to overdraft fees, bounced checks and could ultimately lead a business to failure. In order to improve cash visibility, businesses should begin to incorporate AI and API based cash management tools, like Trovata. With Trovata, businesses gain instant access to their real-time, consolidated cash position.

  1. Maintain Relationships With Lenders

By maintaining a strong relationship with your lending partners, you put your business in a better position to weather the occasional cash shortage. According to QuickBooks, “One way to put yourself in a good position to handle cash flow shortages is to obtain a line of credit from your lender that you can readily access whenever you need a little extra cash. Obtaining a line of credit in advance is easier than having to go looking for a loan when your business is experiencing financial difficulties.”

Maintaining healthy cash flow is crucial to the success of a business. While cash flow management may seem overwhelming, Trovata makes it simple. As an automated cash management platform, Trovata uses machine learning and AI technology to eliminate many of the manual aspects of cash forecasting reporting. directly integrates with banks and allows its users to connect to their banks in minutes. With Trovata, cash positioning is fully automated and users gain access to built-in business intelligence tools to visualize, analyze, report, and reconcile cash flows.

To learn more about Trovata’s automated cash management solution, visit

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