How Technology Can Improve Your Cash Flow
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Technology can not only improve your cash flow, it can also accelerate your receivables and extend your payables, preventing your company from becoming overleveraged, says David Luke, treasury management sales executive at Regions Financial Corp.

“Using technology optimizes the cash cycle, providing a company with working capital,” he says.

The most popular technology options to improve a company’s cash flow are:

Automated Clearing House (ACH)

Automated Clearing House processes debit and credit card transactions through a secure, electronic, nationwide network. Payroll direct deposit is an example of ACH that allows for quicker deposits and decreased administration costs.

Lockbox

Lockbox is an easily accessed post office box to which a customer of the business sends payments. The bank then collects these payments and deposits them, providing faster processing and quicker access to funds.

Quick deposit

Quick deposit allows users to deposit checks by scanning them with a specially designed desktop scanner and transmitting them to a bank. Quick deposit typically has an extended deposit deadline and allows easy error correction and review.

Electronic check services

Electronic check services converts checks to an electronic transaction received by a bank. This allows for quicker deposits and reduced administration costs.

Commercial card

Commercial card allows a business to make purchases from a vendor if the vendor accepts credit cards. This provides reduced administration costs and better purchase control.

Single-use accounts

Single-use accounts act like a paper check by creating a virtual 16-digit account number for each payment, allowing businesses to set credit limits and control spending.

While there is typically a fee associated with these services, the time and associated costs saved make them well worth it, Luke says. Such services are available to companies no matter their size.

Acme Truck Line Inc., for example, uses many technology options to manage its cash flow, including lockbox, commercial card and ACH.

“Through treasury management, we have been afforded the opportunity to get funds deposited with greater speed, allowing us to get those funds posted to our receivables faster,” says Kimberly Foster, controller of the truck transport company. “That is probably the greatest benefit to cash flow that a company can ascertain. Eliminating the manual processes allowed us to focus our accounting staff on other equally important functions without having the additional staff and expense.”

The technology required to implement these processes depends on the business and its needs. If you accept many personal checks at your location, quick deposit or electronic check services may be the best option. On the other hand, if your customers typically mail in payments and your business spends a lot of time processing them, a lockbox may be a good choice.

With any of these options, using some type of software to manage the service and monitor your cash flow is a good idea, Luke says. Sometimes there may be software related to the technology or bank itself, while other times you may need to choose your own software and manage it internally.

Treasury management, along with technology, improves cash flow and helps companies troubleshoot some of the most common cash flow mistakes, such as poor monitoring, making payments all at once and not having cash available in the right place at the right time.

“A lot of companies don’t understand their daily cash position, so they keep excess cash in their accounts for daily settlement. With the technology offered by Regions to manage cash flow and optimize working capital, this cash could be better utilized for debt repayment, investment opportunities and/or general company use,” Luke said.

Cash is the lifeblood of any business, so it is essential to have the cash you need on hand when you need it. Speak with your banker to determine which options will help your business maximize its cash flow and growth potential.

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This information is general in nature and is provided for educational purposes only. Regions makes no representations as to the accuracy, completeness, timeliness, suitability, or validity of any information presented. Information provided and statements made by employees of Regions should not be relied on or interpreted as accounting, financial planning, investment, legal, or tax advice. Regions encourages you to consult a professional for advice applicable to your specific situation.