In today’s fast-paced digital environment, geopolitical risks or economic shifts can suddenly interrupt your business operations. As COVID-19 proved, a crisis can come anytime, and businesses lacking a daily perspective of their cash flow may be unable to react immediately enough to unforeseen cash flow shifts. These businesses may incur financial losses or a significant liquidity crisis due to elevated risk exposure, prompting them to rush for solutions. There is an effective and efficient method for that. Enter Automation.
Do you handle cash flow? If not, how do you know where you spend your money? If so, how much time do you spend managing business finances? Understanding your cash flow will help you forecast company profitability and find investment opportunities.
What is Cash Flow Automation?
Cash flow automation streamlines accounts payable and receivable, allowing business owners to focus and strategize on other important business activities. This software can help you analyze expenses, find savings, find new revenue streams, and discover the greatest expenditure and revenue areas. These software automations have limitless potential. They can instantly connect your accounting software’s income and balance sheet data into cash flow statements and reports, allowing you to gain real-time insights into your cash flow. These technologies also allow you to anticipate future cash flow across several what-if scenarios, allowing you to assess numerous outcomes simultaneously. Discover here to know more about these solutions.
Accounting And Planning Automation
Money management has two equally important facets—accounting and planning.
Accounting is responsible for the management of revenue and expense reports. Can you automate accounting tasks? Yes. Below are some tasks that can be automated:
- Purchasing. Purchasing is the process of acquiring goods and services for your company. These duties are demanding and manual human errors can have major consequences for the business. Accounting software automates these operations, avoiding bottlenecks like long approval queues and ensuring accuracy.
- Reimbursement of employee expenses. Expense automation lets your organization file monthly expenses faster. Your spending management platform can offer pre-loaded corporate cards for company costs. This allows for real-time expense reporting and tracking, avoids staff spending, and simplifies tracking online subscription and marketing spend.
- Account payables. Accounts payable refers to money owed to suppliers, creditors, or vendors. Accountants sort through vast volumes of bills in a sluggish and tiresome manner. Accounts payable automation involves adopting systems that automate manual tasks, helping to expedite invoicing and payment processes.
- Payroll. Payroll automation speeds up the processing of payslips and tax calculations. It also saves time when calculating monthly salaries, taking into account extra hours of work, incentives, and commission.
Financial management and analysis are required for financial planning and forecasting, to identify possible problems and weaknesses, and to adopt efficiency and revenue-enhancing adjustments.
Automating Cash Flow Forecasting
An automated cash flow forecasting process includes several procedures such as data input, communications, and reporting tasks. This can refer to automating the entire process or only parts of it.
Cash forecasting automation has three main advantages. They are as follows:
- Improved Efficiency. Because cash forecasting involves so many data inputs, workflows, reports, and communication, automating it may save a lot of time.
- Increased Accuracy. Cash flow forecasting software becomes a more precise tool. Automation offers comprehensive accuracy analysis, identifying flaws and improving any profitable activities. Because automation saves time, this process can be repeated frequently, improving forecast accuracy.
- Reduced Risk. Automating part or all of the processes decreases human error and increases forecast certainty. Using specialized cash flow forecasting software also allows for rapid and easy assessment and any mistakes or inconsistencies can be examined.
Ultimately, automating forecasting allows businesses to keep and evaluate cash and liquidity data more efficiently.
It eliminates administrative work and error risk, allowing treasurers and financial planners to focus on high-value, analytical operations that help businesses accomplish their cash and liquidity management goals.
Automating Business Expense Management
Poor accounting and financial planning cause many business bankruptcies. Using money management software improves accounting and planning. It also increases your company’s creditworthiness.
If you’re running a small business, the only money management software you’ll need are probably just Google Sheets or Microsoft Excel, depending on your needs. However, when your business expands, the expense report spreadsheets will be unable to manage the growing quantity of data, and the percentage of mistakes will rise as a result.
Simplifying the cost reporting process for employees and managers is a key driver for many businesses that have invested in or plan to engage in automation to improve expense management.
Having all expense data on one platform rather than dotted across spreadsheets and paper-based solutions is another motivation.
You’ll quickly discover that not all automated cash flow management software is created equal.
Look for solutions that eliminate paper, improve tracking and compliance, increase expense reporting accuracy and consistency, and improve overall user experience.
You’ll also want to ensure the solution is functional, meets your company’s needs, and has adequate post-sale support. Implement a cash flow management automation solution that integrates with your financial systems.