What Are the 4 Main Objectives of a Cash Management System?

    May 04 2021

    Topics: Cash Management

    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 discrepancies or how to improve security. A cash management system may be exactly what you’re looking for.

    What are the main objectives of a system for managing cash? 

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    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 minimize the cash leaving your store, you reduce operational expenses and CIT costs. A currency recycler, for example, recycles the same cash that comes in through transactions to fund your employee floats and cash registers.

    A cash management system that’s integrated with cash management software also increases your real-time visibility of cash, so you have greater control of your cash 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 levels, 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.

    Cash management software has many functions that will help optimize your cash levels, including:

    Cash analytics: Provide data around the movement of cash from tills to vault holdings. This allows you to manage cash balances, reconciliation, and deposit reporting more effectively.

    Cash forecasting: Provides insights into trends to forecast your cash needs and replenishments, while enabling you to see cash on hand and what you need on a frequent basis to operate your business efficiently.

    Cash status: Gives you a view into your available cash on hand and frequency of denomination usage. You’ll better understand which notes and coins are most in demand, so you always have enough cash on hand.

    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 helps you make more informed decisions. With the right system, you will 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 will 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 will 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 will 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.

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    Andrea Lombardi

    Andrea Lombardi

    Andrea joined the CashTech team upon its inception in 2003. Learning the business from the ground up, she now utilizes her expertise in account management, planning, and negotiation while managing the daily operations of CashTech’s sales, marketing, and logistics departments. Andrea holds a bachelor’s degree from the University of Western Ontario. She enjoys travelling and has a passion for personal fitness, including obtaining her kettlebell certification. Andrea lives in Toronto with her husband and two young sons.

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