When it comes to A/R, accepting electronic payments from your customers is an absolute boost to your working capital position. In those instances when accepting a check is the only option, however, consider depositing them using your bank’s mobile app to speed the flow of cash into your account.
Supply chain financing is also growing in popularity, as solutions such as “reverse factoring” allow buyers and sellers to accept more favorable payment terms. More specifically, buyers get to extend payment terms while sellers collect payments quicker, with a financial institution serving as the intermediary.
3. Improve bank account and cash flow management
It’s not unheard of for a company to do business and hold deposit balances with several banks. This may impede clear oversight due to decentralized bank accounts and reporting, excessive account documentation. Additional complexities and inefficiencies can arise from highly manual payments and receipts processing.
This is exactly why treasurers must engage their bankers to review their company’s bank account structure and learn about new digital solutions that can close potential gaps and reduce inefficiencies. “Companies need to ensure they’re leveraging the right cash management solutions to help optimize working capital and understand their liquidity,” says Linda Chan, Senior Treasury Management Officer at Bank of America.
Your bank likely has a wealth of tools that you can leverage to better anticipate trends that could affect your cash flow. These may include mobile apps to help you keep tabs on your cash flow balances and working capital position using a smartphone, and online reporting and forecasting tools.
For accounts payable, consider making more payments electronically, rather than by check, as well as solutions that will allow you to automate the cataloging of invoices for better analysis. You may be able to create further efficiencies by integrating your accounting or ERP system with bank applications.
4. Optimize the technology you already have
Many companies may not be in a position to purchase new IT systems. However, there’s no denying that technology is essential to effective working capital management.
To bridge this gap, proactively look for opportunities to work more closely with IT. This new partnership will provide a holistic view of the company’s IT systems and better equip the organization to identify productivity — killers that can be fixed using your existing resources. Automating outdated A/P tasks and A/R or streamlining enterprise resource planning (ERP) could liberate teams to focus their energy on higher — value tasks.
Of course, implementing critical technology should always be an option. But before committing to the additional capital expenditure, enlist a cross — functional team to examine and exhaust all of your internal IT solutions.