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Cash flow management software , also known as cash management software, is used to track, report, and forecast cash flow. It can be used by small, simple businesses or large multinational corporations. Its modules typically include cash tracking, reconciliation, liquidity management, internal banking, electronic bank account management, analytics, reporting, security and compliance.
Cash management software integrates with ERP, accounting, and banking applications to provide a more comprehensive cash management platform . These systems often include powerful features such as data visualization capabilities to see details in easy-to-understand ways, cash management automation to reduce human time commitment on various tasks, and forecasting to provide accurate projections to help with budgeting and planning. .
Why should you have a cash management tool?
Even very small operations should have a cash management tool. Some would argue that other types of applications like Excel work well for this purpose, but how do you manage cash flow in Excel in a way that supports the business as a whole? Excel can work well for forecasting costs and revenue, especially before launching a business. However, once started, a spreadsheet application is not enough to meet business needs.
The benefits of a cash management tool include the ability to track available cash, easily perform cash flow maintenance activities, and make smart decisions based on knowledge of cash assets. These advantages translate into avoiding expensive loans and debts, making payments on time, reducing the human resources required and identifying business trends that can lead to wise choices.
Key Features of a Great Cash Management Tool
The best cash management tools include basic tracking, reporting, and forecasting elements, as well as more sophisticated features like those listed here.
Cash flow tracking
Cash flow tracking is the ability to understand what funds are coming in, what payments are going out, and the cash balance at any given time.
Alerts
Companies with multiple supplier relationships must be able to monitor payment terms to avoid late payments and resulting fees.
Cash flow projections
While it's not always possible to know how much money will come in and go out at any given time, a cash management tool can use likely scenarios to determine a company's future cash position.
Automated bank reconciliation
You can link your cash management tool with your bank account software to enable automated reconciliation, reducing human time investment.
Customization
Even commercial off-the-shelf (COTS) software must provide the ability to customize aspects including categories, entities, currencies, and the information included in reports.
Preview
Cash management software should allow you to create reports, tables, graphs, and other visual representations to help you better understand relationships between data elements.
Multi-User Operation
The app should allow users to grant access to employees and other stakeholders who need to understand the company's finances.
Security
The ability to grant access to multiple users must be balanced with security, given the sensitive nature of the data involved.
Compatibility
A cash management tool must be compatible with other applications already in use in the organization.
How to Choose Great Cash Management Software for Your Business
The best cash management systems are those that include the features listed above, are compatible with existing technology, and are easy to learn for the people who will use them most. Additionally, look for vendors that offer a high level of customer service and support during the installation process and more. Ideally, they will also provide a detailed demo and trial period so you know the app will work for your business in the long run.
Before choosing an inscription, find answers to the following questions.
- Is the information loaded in real time or only at the end of each day? (Real-time information helps you make more informed decisions.)
- How robust is the reporting feature? (Make sure the report reflects the information required by the various stakeholders.)
- Is the software designed to help meet regulatory requirements? (This feature is a must, especially in certain industries that deal with sensitive data.)
- Is the system designed to grow with your business? (Otherwise, you may have to go through the process of choosing another system in a few years.)
- How customizable and flexible is the app? (As your business changes, you may have different needs in terms of currency, reporting items, and other elements.)
- Is the platform designed to integrate with bank account, ERP, accounting and treasury software? (To ensure a complete picture of the company's financial position, the answer should always be yes.)
If your needs are more specific, you can opt for a custom cash management system. For example, you may need to perform custom liquidity calculations or cash flow forecasts based on unique parameters. Additionally, your business may be subject to specific regulations that COTS cash management apps do not meet. Additionally, COTS applications may not integrate well with other technologies, such as financial or accounts receivable and payable systems, or may not scale quickly enough for your growing business.
