5 Points to Address for Real-Time Cash Insights

By Marc Price | May 24, 2022
About Marc

Throughout the pandemic, businesses have had to adapt to survive. The more agile, the better. In order to react more quickly to changing demands and opportunities, financial leaders have looked to empower business owners with real-time cash insight to make better business decisions.

Real-time cash insight initiatives not only provide a measure of liquidity to support spending, but reinforce the analytics that can determine risk factors, how to improve business processes, and whether investments are most effectively focused for bottom-line performance.

Real-time insight into an organization’s cash position helps ensure liabilities always remain balanced against available funds, while improving confidence in cash forecasting to accelerate performance beyond the short-term.

If payment delays are detected in real time, remedial action can be taken sooner to bring the cash in. Automation of follow-up actions can reduce the need for manual intervention, but it all comes down to having the visibility of cash flow status to ensure the right actions are taken at the right time.

What prevents real-time cash insights

Real-time cash insights are held back by process and technology limitations. This article looks into five of the most common challenges, and how these can be addressed:

  1. Cash flow silos
  2. Cumbersome manual processes
  3. Spreadsheets and static reporting procedures
  4. Legacy technology
  5. Skills gaps

Point 1 – Break Down Cash Flow Silos

Cash flow is often considered from the perspectives of outflow (accounts payable) and inflow (accounts receivable) independently. However, business decisions need to take holistic cash position and cash flow projections into account – uniting cash inflows and cash outflows as one. The risks from ignoring these silos are explained in this article about the unseen cost of cash flow silos.

The practicality of unifying these cash flow silos is harder to achieve than you might think. In a recent study conducted by Forrester Consulting on behalf of Corcentric, it was found that 82% of financial leaders are interested in enabling holistic cash forecasting, but only 5% have the partners and/or systems in place to do so at present! Digging deeper, the Forrester survey also revealed:

  • AR and AP processes and systems provide a poor experience and limit financial leaders’ view of cash inflows and outflows.
  • Fifty-seven percent of respondents report their company struggles to innovate payment processes to deliver the experiences their users demand.
  • While finance leaders rely on insights from these systems, 70% of them said that their solutions provide only partial insight into their company’s cash position.

Without unifying AR and AP cash flows, you will need to combine metrics from both flows to achieve the goal of holistic cash forecasting and gain real-time cash insights. The first step along this path is to look at AR automation and AP automation solutions to digitalize your processes. From here, real-time data can be extracted and combined to provide real-time insight into cash position.

Point 2 – Automate Manual Processes

As outlined above, automation is an essential component in unifying cash flow visibility. Automation can produce real-time data flows and remove human error from complex and often laborious processes, such as the need to upload invoices to your customers’ AP portals.

Automation can optimize almost every aspect of the order-to-cash and purchase-to-pay processes. Staff in these departments should leverage automated solutions to win back time to use on more profitable activities that require a human touch.

It’s not just internal processes that can benefit from automation. Customer experience (CX) can also be improved by streamlining and automating the handling of online payments via credit card or direct transfer from bank accounts.

Wherever you automate, you will have access to the underlying data, most-likely in real time. This is essential to empowering real-time cash insights.

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Point 3 – Ditch the Spreadsheets

It stands to reason that the static logging of financial data in spreadsheets, or over-reliance on static reports (rather than dynamic dashboards), does not support real-time visibility of cash position.

Even start-ups and small business owners quickly realize the limitations of working off of spreadsheets on a desktop.

Static documents, such as income statements and balance sheets, should be an output of more dynamic, and ideally automated, financial processes. Having to analyze disparate spreadsheets before acting slows down the decision-making process and puts you at a disadvantage over those with real-time insights. Moving away from spreadsheets to accounting software empowers stakeholders with the real-time insights these can provide.

If the pandemic taught us one thing, it’s that business-critical data should be more easily accessible to remote workers, driving more businesses to embrace cloud-based solutions. This allows multiple people to access one dynamic online source of the financial data truth, in real time.

The bottom-line is that decision-making is easier with real-time cash insights.

Point 4 – Overcome Legacy Technology Hurdles

Achieving any of the above points requires an investment in technology and process change. Don’t stay shackled to legacy technology that doesn’t support the functionality or performance you need, or inhibits growth.

A stack of disparate, legacy technology components can require scheduled export/imports between component parts, and in the worst cases may require manual intervention. Consider ways in which technology improvements across order-to-cash (O2C) and purchase-to-pay (P2P) systems can streamline the process flow and provide the data for real-time insights.

Connect point of sale through to order fulfilment, delivery, and invoicing, and close the loop with online payment systems that can handle multiple currencies and payment methods. Identify workflow and data bottlenecks, and use technology to streamline, automate, and overcome these performance issues.

If it seems too daunting to rip-and-replace legacy technology, consider using a managed service provider to help you identify and fix process inefficiencies without the need to task your IT team to develop, deploy and manage solutions in-house.

Point 5 – Fix the Skills Gap

Recruitment is one of the biggest challenges businesses are facing in 2022. The Great Resignation, combined with the need to accelerate investment in automation technologies, has produced a recruitment headache of epic proportions.

The United Kingdom has seen vacancies grow to almost 70% of pre-pandemic levels, with 1.8 million job postings displayed between the start of January and end of February 2022 (according to this article from February 2022 by Signature Recruitment). These recruitment needs have left businesses struggling with both bandwidth and skill set in achieving  real-time cash insights.

In the Forrester study referenced earlier, more than half of the audience cited a lack of internal talent and/or bandwidth as their top people challenge in creating a real-time view of cash position. The same study found that 85% of companies are engaging or plan to engage a managed service partner to fill existing talent gaps and leverage best practices. Most also plan to invest in AP and AR automation in the next few years. This could have the dual effect of increasing real-time cash insights without increasing headcount.

Liquidity and Cash Flow Forecasting

A business’s financial health relies on liquidity to invest and grow. Cash flow management and cash flow forecasting and are important components in driving the positive cash flow that provides this liquidity. Both cash flow management and forecasting can be improved as financial insights approach real time through addressing the five points outlined in this article.

Without sufficient liquidity showing on the balance sheet, businesses need to look for ways to liberate working capital or seek external funding from financial institutions or other lenders.

Solutions such as Managed Accounts Receivable (MAR) from Corcentric, a form of supply chain finance, enable businesses to rapidly liberate working capital through a managed service that combines technology, people and funding. Furthermore, MAR provides funding on a non-recourse basis, which can form part of a financial risk management and reduction solution.

Financial services can be leveraged to support liquidity needs, but how adaptable are they to the fluctuations we have seen over the last few years? Real-time cash insights are more valuable when they can be swiftly supported by financial services in times of need.

Anything businesses can do to assure greater confidence in their cash flow forecasting will reduce risk and create a competitive advantage. Real-time cash insights enable businesses to refine and course-correct forecasted cash flow before problems occur.

Download the study The Future of Finance: 360-Degree Cash Flow Visibility and Control to find out more.

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