Cash isn’t going anywhere anytime soon, so you’ve been thinking more about how you manage cash in your business. Your cash handling costs may be more than you anticipated. Maybe you’re wondering how to reduce CIT fees or improve security.
What are the main objectives of a system for managing cash? Knowing those can help you assess how well your current system is working, or make the right choice if you’re looking to acquire one.
1. It Controls Cash Flow
Perhaps the most vital objective of any cash management system is limiting your cash outflow and accelerating cash inflow.
This objective is clear-cut. As a business owner, you want to increase the amount of money flowing into the business. At the same time, if you can minimize the cash leaving your coffers, you’ll be in a much stronger position.
A good cash management system looks at all entry points and exit points, then works to improve flow.
2. It Optimizes Cash Levels for the Business
Controlling your cash flow is essential to optimizing cash levels. If your inflow isn’t available for your use – you have outstanding unpaid invoices or money is sitting in your cash registers – you may not have the liquidity your business needs.
Your cash management system allows you to optimize your cash, creating better liquidity.
A good example is your store float. If you’re unsure what your inflows will look like for the day, you might set the float higher than you need to. That money then sits in your petty cash fund or smart safe, when it could be paying down debts or sitting in a deposit account earning interest.
Conversely, if you put all your cash on deposit, you’ve hampered your liquidity. When an unexpected cost crops up, you may find you don’t have the cash to cover it.
3. It Enables More Efficient Cash Planning
The right cash management system helps optimize cash, which allows you to plan more effectively. When you determine how often – and how much – to deposit, you control CIT fees and keep the right amount of cash liquid for the business.
Automated cash management systems collect and provide data, which help you make these sorts of informed decisions. With the right system, you can stop worrying about cash shortages and multiple deposits running up the costs of doing business.
4. It Enables More Effective Cash Management
Cash flow is a factor in more than 80 percent of business failures, so it’s easy to see why business owners put so much emphasis on managing cash flow correctly.
Having the right cash management system in place is key here. A good management system allows you to see cash as it flows through your business, giving you a bird’s eye view of where cash is leaving the business and where it’s entering.
You can also make better decisions about how to flow it through the business, such as when to deposit it or how much to hold back. Finally, you can work to increase inflows. All of your decisions will be backed by data to both streamline and improve cash management and flow.
Discover a Better Way to Manage Cash
Spreadsheets and outdated technology can hide cash flows and leaks from you. Automated cash management solutions help you see the bigger picture and let you make better decisions for your business.
If you’re thinking about revamping your cash management system, there’s no better time to get in touch. Discover a better way to manage your cash.