Guide to the cash management solution

Liquidity can be a bottleneck for many businesses. Although you may have assets, you need liquidity to ensure that you can continue with daily operations, pay your bills, and settle any short-term debts and liabilities.

The best way to maintain that you have the liquidity for these obligations is to use cash management solutions to effectively manage and stay up to date with your liquid assets.

One of the biggest goals of any business is to become profitable. It is, however, a difficult goal to achieve without proper strategies in place. This is why cash management is a key component to being able to maximize profitability.

Ensuring that your cash is well-managed, you have the right amount of liquidity, and you’re not overspending means you can achieve better profitability.

While you can try to minimize the risks associated with your business, it’s nearly impossible to be rid of them all. Your best chance with risks is to mitigate them and prepare yourself for future situations you may find your business in.

Efficient cash management is necessary to make sure that you have enough cash on hand to mitigate future risks.

It’s a well-known fact that business leaders will make better financial decisions for their companies if they are equipped with the knowledge and data to back up their decisions.

At its core, cash management is a key process as it will help you gather what you need to know about your cash and liquid assets, as well as what must be done about them.

While cash management focuses on the internal matter of your business' liquidity, profits, and growth, these aspects of your business impact relationships with suppliers, customers, and investors.

Being able to manage your cash well allows you to ensure that your daily business operations are not disrupted, meaning that stakeholders will not be inconvenienced. This will boost trust in your business relationships.

As with all aspects of your business, complying with industry and government regulations is a requirement. One of the best ways to ensure your business’s compliance is by managing your funds well.

When you use corporate cash management solutions, for example, you’ll have a much easier time monitoring how and where you are earning and spending money. Maintaining compliance is simpler when you have accuracy.

Other than a focus on liquidity and profitability, cash management also allows you to make better decisions toward your business growth.

When you know how much cash you have and what you’ll need it for, you’ll also have an easier time figuring out how much you have left over to invest in your growth. It also leaves you with enough to adapt when needed.

Your business plan should be a long-term commitment. To realize your plan, it’s essential to ensure that you are not burning your money.

In this case, cash management helps you forecast and portion out how your cash should be used to sustain your business. During the difficult and slow periods, you’ll have enough cash to tide you over.

Put simply, cash management offers a broader scope than cash flow management. Both are important to your business and you must do both effectively to achieve the best results, but they serve different purposes.

With cash management, you’re looking at more than just your daily cash inflows and outflows. Cash management is a process that you’ll want to undertake as part of your daily business operations to ensure that your cash and cash equivalents can settle short-term debts and fulfill any immediate obligations.

More than that, however, it also examines how much cash you need before you can invest some of it into your business growth. It allows you to look at how you can increase your profitability by managing your cash and its usage efficiently.

In a way, cash flow management could be considered an aspect of your business cash management. Unlike cash management, which aims to not only ensure that you have liquidity but also to maximize profits and growth, cash flow management largely focuses on the inflows and outflows of your cash.

It helps you maintain daily operations and allows your business to go smoothly. Without a positive cash flow, it’ll be difficult to keep the business afloat. Your business cash flow management needs to go hand in hand with general cash management.

By effectively managing your cash flow, you can identify areas to optimize your finances and implement strategies to increase cash flow. This will ensure you have sufficient funds to cover operational costs and invest in future growth.

Look at how much cash inflows and outflows you have at any given time. This can help you determine if you need to invest some of that cash into your business or if you need to take out a loan.



● Scope:

You don’t want the scope of cash flow management to be too broad. The focus of cash flow management is on your inflows and outflows. Cash management encompasses a wide range of things, such as liquidity, growth, and profitability.

● Focus:

While cash management solutions aim to maintain liquidity, maximize profitability, and enable growth in equal parts, cash flow management focuses on your daily cash inflows and outflows to maintain operational continuity.

● Tactical approach:

Considering that cash management is an overarching process that sees many different components under it, you’ll want to break it down to ensure you’re not missing anything. Cash flow management is one of these components.

● Time horizon:

Both cash management and cash flow management can have long-term plans, but you’ll need to do cash flow evaluations on a more regular basis in the short term. Each quarter, for example, will be helpful. Cash management, however, can be evaluated every fiscal year or so.

1. Optimizing liquidity

There may be situations where you need more cash than what you have on hand to settle your current short-term debts. This is why it’s important for your business to implement a cash management solution that can help you analyze your liquidity and your debts. 

2. Minimizing costs

Overspending is often a problem that businesses face when they are not keeping a close eye on their expenses. Cash management solutions can help you track where your money is and how it is being spent. A key objective is to identify patterns to minimize costs.

3. Maximizing returns

The way you choose to use your cash impacts how much you’ll get in return. You want to optimize how and where you’re spending your money to maximize the returns you get. Planning and analysis-based cash management solutions aim to help you with these decisions.

4. Forecasting accuracy

Forecasting is a part of your cash management process, but one of the objectives of the process is also to get more accurate forecasts. Feeding historical data back into your system will improve your forecasts, making the cycle more efficient.

5. Risk management

Risk management is always closely tied to cash management, as financial risks are some of the biggest a business can have. Cash management solutions aim to help you control and mitigate these risks by identifying them so you can be balanced with your cash.

6. Efficient working capital management

Cash management looks at your current assets and current liabilities to not only determine how much you have in working capital but also to manage how this can be used efficiently. It also can identify if you need to make changes to your liabilities.

1. Enhanced efficiency

The best cash management solutions for your business should be able to increase the overall efficiency of your processes. There are other important goals that you want to achieve by implementing cash management solutions, but if they over complicate your processes, they’re not doing their jobs.

2. Improved cash visibility

Given how much cash there is for a business to manage, often you get low visibility of where your cash is at any given time. When implementing corporate cash management solutions, it’s important to consider whether or not they help you improve cash visibility.

3. Better investment decisions

You need a holistic view of your cash and cash equivalents when making decisions to invest in your business growth. When implementing a cash management solution, keep in mind that you want tools to help provide you with the financial information you need before deciding to invest.

4. Reduced fraud and errors

Doing your business cash management manually is risking more than just a handful of administrative errors. It also means that some fraud attempts may slip and go unnoticed. You’ll want better income and expense tracking as well as cash flow analysis and reduce frauds and errors.

5. Adaptability to market changes

Market conditions are constantly fluctuating. The best chance for your business to stay afloat during these changes is to ensure that you have the funds to adapt when needed. The accuracy and efficiency provided by your cash management solutions will be highly valuable in these circumstances.

6. Customer and vendor relationships

How you manage your cash will directly impact your relationships with customers and vendors. Use your cash management solutions to ensure business continuity and manage both incoming customer payments as well as outgoing vendor payouts. You want to maintain strong relationships with all parties.

Cash forecasting refers to the process of predicting and estimating what your cash inflows and outflows will look like at a given period in the future.

This is done based on any historical data that you already have, along with the current and potential future market circumstances. The goal of cash forecasting is to prepare yourself and meet the liquidity requirements to maintain a positive cash flow.

Likely you’ll have different sources of cash and multiple bank accounts used to manage it. With the complexities of interests and mature earnings, sometimes it’s difficult to measure how much cash you have on any given day.

Good cash management solutions will be able to extract data from your bank and cash flow statements, sales revenue, investments, and many more.

You can’t have effective cash management without good cash flow analysis, as your cash flow is a key component of the cash management process.

Many corporate cash management solutions can calculate your cash inflows and outflows automatically for you, improving the accuracy of your cash flow statements. Your cash management solution should also have analytical tools to aid you in analyzing your cash flow patterns.

Float management is divided into two major aspects: disbursement float management and collection float management. The goal is to delay disbursements for as long as possible without defaulting, while also minimizing collection delays.

Cash management solutions that have timing components will enable you to easily determine when the latest dates are for making your payments. Similarly, you’ll want features that can speed up the collection process.

Liquidity management is a key part of your cash management. It’s also crucial that at least one of your cash management solutions has features that can help you calculate your liquidity and working capital.

A key part of cash management is effectively planning and managing your business activities—starting from daily operations to investment plans. To ensure all activities go smoothly, you want to manage how much liquidity you have.

All businesses have short-term debts that they have to settle. To do this efficiently and ensure that you still have cash left to maintain business operations, you’ll want to use a cash management solution that can help you manage your working capital.

This would include features that make cash flow, accounts receivable, and accounts payable easier to handle.



Unlike traditional cash management processes, many of the best cash management solutions in the modern era are digital and help with automation. A big draw of these solutions is that they can be integrated with other systems that you use.

For example, your financial planning solution could be integrated with your ERP or accounting system. This helps you stop data silos and ensures accuracy across all platforms.

Your business may already use a risk management solution, which is used to help identify, address, reduce, and mitigate financial risks. Many cash management solutions will offer features such as visualization and analytical tools for risk management.

Ensuring compliance to avoid penalties will also fall under this component. In such cases, you’ll find built-in compliance features that will guarantee that you aren’t breaking any regulations.

Put simply, cash forecasting solutions allow you to streamline the forecasting process. It helps you gather data and information in one place. Most cash management solutions of this nature will also have analytic tools to identify patterns and help you forecast your cash flow and situation in the coming period. 

It’s not enough to just make cash forecasts. You also want to know the position of your cash and cash equivalents at any given time. A cash positioning solution helps you determine how much cash you have. It can also be used to generate cash flow statements and reconcile bank accounts.

While cash positioning solutions take a broader approach, you may also want to use cash management solutions that focus on your cash flow. These can provide you with analytical tools to aid you in tracking your cash flow, curbing overspending, and making better cash flow decisions for your business.

Not all your money will be available to you immediately. Cash management is about timing as much as it is about cash itself. Float management solutions will factor in the timing of your income and expenses. This allows you to ensure that even with the timing differences, you’ll always have sufficient cash on hand.

Most liquidity management solutions focus on both incoming and outgoing payments. Business bank accounts can fall under this type of cash management solution as they help you categorize your money more efficiently.

You’ll also want to use tools that can analyze how much liquidity you need and how much you can invest back into your business.

Working capital management involves several different components, so it’s no surprise that there are a number of different tools that fall under the umbrella of working capital management solutions.

Supply chain, procurement, and inventory management platforms are some common examples of this type. You’ll want these solutions working in tandem with cash forecasting and positioning tools.

With the rise of modern technology, there are more cash management solutions that are ‘smart’. Equipped with artificial intelligence and machine learning technologies, technology-driven corporate cash management solutions can give you better insights during your planning and budgeting processes.

You’ll be able to easily identify financial patterns and get more robust analytical features.

There are many finance and tax-related regulations that you’ll have to pay close attention to. To help you with ensuring compliance, leverage cash management solutions that have built-in compliance features such as tax calculations. These go hand in hand with risk management solutions a lot of the time. 

One of the main goals of cash management is to maintain your liquidity, as this will ensure that your business operations and other related processes all go smoothly.

The accuracy and efficiency that a cash management solution can offer will undoubtedly improve liquidity.

As cash flow management goes hand in hand with general business cash management, it makes sense that using a cash management solution will help you with cash flow forecasting.

It also will give you better transparency on your current cash flow cycles.

It’s easier to spot and curb overspending when you make use of corporate cash management solutions to track your spending.

Beyond that, however, using a cash management solution can also significantly reduce administrative costs. That’s less on papers, stamps, and storage!

The key to making good financial decisions is to have the information you need readily available to you, which can be done by leveraging automated cash management solutions.

Delegate administrative tasks to the software and spend more time on decision-making.

Don’t waste time with manual processes. Your business should aim to become more efficient to improve your growth faster, which can be done with the aid of the best cash management solutions.

Automation will undoubtedly increase your overall cash management efficiency.

Risks are inevitable when you’re running a business, but there are ways you can mitigate them. Using cash management tools will allow you to prepare and budget for unforeseen events better.

Get a better idea of how much cash you’ll need with cash management solutions.

Spend more time building relationships with your stakeholders without having to worry about the administrative side of cash management.

Stakeholders will be pleased if you know exactly how much money you’re earning and spending, which cash management solutions can help you with.

Cash management is important not just for your daily business operations, but also to ensure compliance. Many corporate cash management solutions have built-in compliance and reporting tools to help you maintain accuracy in less time. No more complex reporting issues!

Managing your cash and liquidity may seem like a simple task when your business is on the smaller side, but it will get much more complicated as you scale and grow.

This is why you want to implement automated cash management solutions for your business.

You may already be managing other aspects of your business digitally, in which case relying on paper documents for cash management is ineffective.

Electronic cash management solutions, especially those that can be accessed online, help you integrate your processes with new technologies. 

An overarching tool you can use that encompasses multiple components of the cash management process is a piece of cash management software.

It helps you track where your cash is at any given time instead of having to manually track where and when cash flows into and out of your accounts.

Outside of cash management software, another tool that is important to your corporate cash management is your bank account. Online banking and payment platforms specifically can streamline the way you manage your cash.

Gone are the days of having to go to a bank branch. You can now easily perform and track transactions online.

Relying on paper documents for any business process often complicates things. Electronic data interchange, or EDI, refers to systems that can help you process information and conduct business electronically and digitally.

Invoices and purchase orders, for example, will have standardized formats that can be sent, received, and viewed with ease.



There are several different cash management solutions and tools that you’ll be using to ensure that you’re maintaining liquidity and maximizing profits but to make the most of them, you will need a way to tie them all together.

APIs and integration platforms are necessary to make your cash management solutions all work in tandem smoothly.

The goal of using risk management tools is to identify the potential risks in your business operations and measure them. You can also use them to set different parameters that will help you minimize and mitigate any cash management-related risks.

These tools provide you with better methods to track your risks and document them.

To make better financial decisions and manage your cash effectively, you’ll want analytical and reporting tools in your arsenal.

Your cash management software and risk management tools may already have built-in analytical and reporting capabilities as well. Make sure that you take advantage of those if they are available to you.

Your cash flows are a big component of your cash management. This is why having cash management solutions that can help you with monitoring your cash flow is a good starting point.

Make sure that you are always keeping a close eye on your cash inflows and outflows for smoother business operations.

You may run into some issues while you’re monitoring and managing your cash. The best way to ensure that these don’t cause you trouble is to try to detect them as soon as possible, which can be done with the best cash management solutions.

Allow your system to flag issues so you can immediately resolve them.

Budgets are great to give you a general guideline on how much you should be earning and spending, but your forecasts may not always be accurate.

Make sure that you take into account your current performance. Don’t be afraid to adjust and update your budgets accordingly for future cash management.

One challenging part of cash management is creating accurate cash flow projections, especially because there are a lot of different factors that go into it.

Doing these cash flow projections more frequently will help mitigate these challenges, as they will be easier to adjust. Factor in your business performance and market conditions as well.

Every business wants to grow and consistently hit higher numbers, but good cash management hinges on strategic plans for your growth.

You want to strike a balance and not attempt to grow too fast, which would involve burning a lot of money to achieve it. Take your current performance and resources into growth considerations.