Protect and Enhance
Your Company’s Future with
Cash Management Practices
It’s a well-known fact that having immediate access to cash enables you to remain
competitive within your industry. Without such access, paying bills, embracing new
opportunities for growth, and maintaining much needed financial flexibility is hindered.
In order to address this, many companies require financial evaluation in order to deter-
mine where processes can be refined for an open line of access to liquid funds.
Adopting this concept of better cash management—the process of balancing income
to expenses and forecasting cash flow—is often easier said than done.
Why It’s Important
Companies are often required to spend money before they’ve received revenue.
Without access to liquid funds to meet this need, companies can become insolvent in a
hurry. This inability to pay debts and reconcile transactions as they occur can plunge
companies down a rabbit hole toward bankruptcy. Coordinating departmental efforts
can provide a clear trajectory of forecasted earnings and deficits before needing to act.
Consider, for example, what happens when a company issues a recall due to signif-
icant product malfunctions—such as Toyota’s 2010 recall that cost the global manu-
facturer more than $5 billion—or is hit unexpectedly by contaminated resources, as
was the case when Chipotle experienced a listeria outbreak, leading to a 44% drop in
net income. Instances such as these, though extreme, do happen. When companies are
devoid of ready cash to handle salaries, operational costs, or crisis management, such
unexpected downturns can leave long-lasting results.
By implementing new—or improving existing—cash management policies, compa-
nies protect themselves against unforeseen risk. These systems also help streamline
internal financial processes by discovering ways to create efficiencies.
How to Get Started:
Implement Universal Practices
One way to implement better practices
is to integrate a cash management
culture throughout all departments.
Whether employees are involved in
accounts receivable or payable, handle
inventory, or negotiate salaries with
prospective employees, transparent
cash management practices encourage
financial discipline, enabling all
departments to operate under the
same guidelines.
Cash Flow Forecasting
When exploring cash management
systems, financial or banking partners
provide expert account analysis that
evaluate both existing practices and
potential profitability once solutions have
been implemented. Teams gather receipts
and disbursements covering a given time
period to evaluate past cash flow, allowing
experts and financial teams to forecast
future financial climates and establish
a solid budgeting plan.
MEET NICK MUCILLI,
senior managing director
of the Cash Management
Division at Sterling National
Bank. When meeting with
new or prospective clients,
Cash Management sales
officers on Mucilli’s team
perform a deep dive into
existing processes to gain
an in-depth and holistic
understanding of workflows.
Through this process, they
can find ways to create
efficiencies and define cash
management solutions that
address real needs.
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