Business Insights

How technology can improve your cash flow

Businesses of every size can struggle with cash flow. Here’s how technology can help.

Cash flows in and out of your business like its lifeblood. Any business owner—from leaders of the quaintest mom-and-pop shops to booming small businesses—knows that this is true.

Consider a hypothetical company that handles residential moves. They have struggled to keep a positive cash flow because of the amount of time it took to receive and process manual payments from their clients and suppliers. To solve this issue, they implemented a suite of tech fixes that made their business run more smoothly. Eliminating manual payments and turning to automated, electronic payment processing allowed them to deposit and receive funds much more quickly.

If your business doesn’t have a positive, reliable cash flow, your business could be in trouble. Cash flow can accelerate your receivables and extend your payables, preventing your company from becoming overleveraged. It not only ensures the smooth day-to-day operations of your business—it also gives you peace of mind and the confidence to innovate and grow.

Technology and treasury management

For today’s business owners, there is a tech fix for most cash-flow problems.

The technology required to implement these processes depends on the nature of your business and its specific needs. If you accept personal checks and they’re slow to hit your accounts, then quick deposit or electronic check services may be the best option. On the other hand, if your customers typically send payments by mail and your business spends a lot of time processing them, a lockbox may be a good choice.

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.

Solutions for your business

Here are some of the most common cash flow issues that small businesses face. For each of these issues, there is a technological solution that can help with your cash flow.

Deposits are slow to reach your account. Dealing with physical checks can cause a time lag, resulting in a cash flow crunch. If you’re struggling with this, consider electronic check services, which convert checks to electronic transactions received by a bank. This allows for quicker deposits and reduced administration costs. In some cases, a purchasing card is another way to resolve this issue—it can allow a business to make purchases from a vendor if the vendor accepts credit cards.

Payroll is cumbersome and time-consuming. If you’re spending too much time on payroll, consider an automated clearing house (ACH). This can be used to process 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.

Funds are difficult to access. If your bank is slow to receive checks, that can create a situation in which you can’t access the funds you need to cover your operations. The solution? A lockbox. This 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.

Bookkeeping is becoming burdensome. As a business owner, you want to spend your time serving your customers, not managing your company’s books. If administration and bookkeeping are eating into your time, consider remote deposit capture. This allows users to deposit checks and transmit them to a bank by scanning them with a specially designed desktop scanner or using a mobile device.

Spending is out of control. You can’t get on top of your cash flow if you don’t set spending caps. If this is an issue for your business, you can turn to single-use accounts, which act like a paper check by creating a virtual 16-digit account number for each payment. This allows businesses to set credit limits and control spending.

Better cash flow through technology

If your business is struggling with any of these issues, rest assured that there is a technological solution to get your cash flow on better footing.

Cash, after all, 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 or business branch manager to determine which options will help your business maximize its cash flow and growth potential.

Three things to do:

1. Learn more about creating a cash-flow management strategy for your small business.
2. Consider running a cash-flow sensitivity analysis to make sure your business is on solid footing.
3. Contact Regions Treasury Management Services to discuss improving your business’s cash flow.