Mitigate financial inefficiencies with cash flow management

Running a business isn’t easy. Business owners must juggle managing a team of employees and ensuring your product or service meets customers’ needs while staying on top of the latest industry trends. With so much going on, it may be beneficial to streamline some processes to free up time to focus on other tasks. One area where a business can make life easier is in how they manage their cash flow.

“Many businesses understand the value of building a relationship with their bank,” says Lynn Young, a cash management advisor at Northwest Bank. “A good partnership can lead to better money management and promote a healthier bottom line.”

Smart Business spoke with Young about how businesses can benefit from having an efficient cash management process in place.

What are some common areas of inefficiency in businesses’ cash management processes?

Cash management services are evolving rapidly in the financial industry and many businesses aren’t taking advantage of current technology to help with collecting, depositing and disbursing funds to vendors and employees.

There’s also a gap in how some businesses manage the extra funds in their operating account. They could be using excess funds to earn interest income through investments or to pay down outstanding line of credit balances.

Also, some businesses don’t monitor for check fraud or unauthorized ACH transactions, which could be a costly oversight if an incident were to occur.

How do those inefficiencies affect a business?

Inefficiencies like these can cost businesses both time and money. It can take more time and money to pay employees to perform many of the simple day-to-day cash management functions that could easily be performed electronically.

What role does a cash management advisor play in helping companies streamline their operations and increase efficiency?

A cash management advisor is someone who has the experience and knowledge that is needed to be a business’ financial partner. After evaluating a business’ needs, a cash management advisor can introduce products or services that will benefit a business. Those could include products such as remote deposit, mobile deposit or ACH services.

The right combination of cash management services can lead to improved cash flow while at the same time increasing business probability by freeing up time and resources to focus on other tasks.

What is the relationship between greater cash management efficiency, improved security and the mitigation of fraud?

Fraud prevention plays a crucial role in protecting the financial stability of a business. There are services, such as Positive Pay, that can help protect businesses against counterfeit check and ACH fraud by enabling them to monitor their daily transactions for suspicious activity. One fraudulent occurrence can be devastating to a business’ bottom line. That’s why it’s important to take fraud prevention seriously.

What should a business that wants help in these areas look for in a cash management advisor?

A business should view its cash management advisor as a trusted business partner. In return, a cash management advisor should be knowledgeable and have a full understanding of the business they’re working with and be available to discuss changes in day-to-day operations or any future plans the business may have. Ultimately, a company’s financial institution is a resource that can help them grow and expand their business.

Northwest Bank is Member FDIC

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