Companies need effective cash management. This is not some aspirational vision. It’s a cold reality. Cash flow is the foundation of any business. (Try running a business without it.) A business needs to generate cash from activities to pay its expenses and have enough left over to repay investors and grow the business. Proper cash management lets a company avoid taking on unnecessary debt.
Additionally, a company’s cash flow is an indicator of the overall company health. Like the blood in your veins, if your cash stops flowing you’re facing a crisis of survival. For this reason, it’s critical to have the right tools for cash management. Today, this means software. Cash management software that easily integrates with other accounting software is essential to running a health business.
Understand Cash Requirements
Even when a business is profitable, it needs to keep a steady eye on cash flow. A slow cash cycle, for example, can make a profitable company dangerously cash poor. To this end, a cash management system should track balances across all bank accounts and adjust for all currencies and exchanges. It should simplify the account reconciliation process by automatically adding in bank charges and interest earned.
A cash flow management application further needs to record omitted cash directly from the reconciliation screen. Cash management software can then enable a business to understand cash requirements by determining the cash on hand and the liquidity of assets. It thus allows managers to understand current and future cash needs.
Enhance Cash Forecasting
The best cash management software will keep track of cash flows and automatically transfer data between accounts payalble (AP), accounts receivable (AR), the general ledger (GL) and more. It will ideally use these capabilities to predict future cash needs across all modules and subsidiaries as well as all currencies.
Forecasting of this type is especially helpful for companies with a seasonal business cycle. For example, a toy company might need to expend a great deal of cash in the summer to get materials to produce a high volume of merchandise for the upcoming holiday season. Accounting managers have to be able to model and plan for these outlays.
Acumatica’s Cash Management module offers this kind of functionality. It provides a 30-day trend to help companies fully understand their cash positions. With accurate predictions for cash flow, companies can strike a balance between having too much cash or too little and determine if the current cash flow is sufficient to maintain operations or if adjustments need to be made.
Gain a Complete View of Cash Flows
Cash management software should allow for the creation of customizable reports. These provide accounting managers with clear views of the company’s cash flow, based on their business model. The software has to track funds that are in transit and maintain control over all cash movements. Petty cash and bank balances have to be included in the complete overview to view balances and transactions quickly and easily. With the Cash Management module, Acumatica users can trace cleared and uncleared balances and clear and add cash transactions directly from the inquiry screen.
Integrate with Financial Modules
Cash management software ought to integrate seamlessly with all other financial software solutions your company uses. It will automatically collect all cash transactions from the GL, AR, and AP and put them into the cash management solution for clearing and reconciliation. Any transactions linked to vendors or customers in AR and AP modules must have their balances updated appropriately. The software will ideally also configure a list of processing centers that accept cash payments and associate customer payments with them.
Acumatica Cash Management empowers business leaders to monitor, predict, and manage cash flow. The cloud-based solution is accessible from anywhere. Its cash management features connect to the rest of your business. Using commonly accepted techniques, Acumatica makes it easy to manage day-to-day transactions, funds transfers, cash balances, and bank account reconciliations—all in one place.
Let us help you determine if Acumatica Cash Management is the best fit for your business. We’ve gone through this process with many other companies over the last 23 years. Contact us for a demo and discussion.