Businesses looking to stay competitive, drive growth, and build resiliency are increasingly focused on cash flow. What was once considered a back-office function is now viewed as an opportunity to enhance efficiency and generate revenue.
In a recent PaymentsJournal webinar, Bottomline’s Leo Gil, VP Product Management, and Paul McMeekin, Vice President for Solutions Marketing , in addition to Albert Bodine, Director of Commercial and Enterprise Payments at Javelin Strategy & Research, discussed key strategies for optimizing cash flow and highlighted how these efforts can elevate businesses.
One: Put Idle Cash to Work
It’s common for companies to have cash on hand, whether from available credit facilities or recent customer payments still sitting in a bank account. Optimizing this starts with cash visibility—having a real-time view of all accounts and balances across multiple banks.
For a company with 20 banking relationships, this means logging into 20 different banking portals, exporting data, inputting it into a spreadsheet, and using macros just to get a single cash position. This process can take hours, meaning the data is outdated by the time it’s ready.
Some boards are still advising CFOs to diversify and work with more banks, resulting in even more portals to manage. This makes forecasting difficult, even for a simple question like how much cash will be available at the end of the week or month.
“One of our clients is a hotel company, which needs to deploy cash sometimes quickly to particular properties to handle extra business or fix issues that might have occurred,” said Gil. “With this finance team, we got elevated to a strategic role in the company where they’re helping the company make decisions. How do we deploy cash? Do we transfer money between accounts? Do we pull from a line of credit we have? How do we do that in a way that maximizes returns and reduces interest expense?”
These functions are only possible if a company has full control over its cash visibility, supported by sound practices and forecasts. The key strategy is leveraging the cash on hand to drive the business forward.
“A CFO told me that his CEO walked in his office and said we have a great opportunity to make an acquisition, but it’s going to cost us X millions of dollars,” said Gil. “Can we do it? The answer is, well, I need to look into it, but you could miss a pretty big business opportunity if you have to wait to make the decision. Companies have to plan and look at everything they have so they don’t miss this kind of opportunity.”
Two: Close Financial Periods Faster
Operationally, you can’t put idle cash to work without properly closing financial periods. Most finance teams experience a rush at the end of the month or quarter to reconcile bank accounts and payments. This is where automation and connected finance become critical.
“Another of our customers is construction company,” said Gil. “They have more than 1,000 bank accounts across 80 banks, and there’s a constant inflow and outflow of payments for critical projects that they are completing. Payments are coming in from clients, while they’re making payments to subcontractors or employees.”
“Now imagine reviewing over 1,000 bank accounts, looking across hundreds of thousands of transactions to match and reconcile between your bank statements and your ERPs and other systems you may have internally,” he said. “Those are the challenges that finance teams face on a regular basis.”
When finance teams are overwhelmed by manual processes, it’s hard to support the business effectively. Strategically, automating the financial period closing process can lead to significant improvements and drive organizational growth.
“Always be closing,” said Bodine. “I think we are getting to the point in the finance world where we’re going to see a more agile approach to closing periods. I don’t think that’s going to happen on an end of year basis, but during the year the ability to have systems in place to always be closing is becoming critical.”
Three: Digitally Transform Payments
Checks are the single most targeted form of commercial payment, yet 33% of payments worldwide are still made by check. Digitizing payments, contrary to what some may believe, reduces the risk of fraud.
“I met with a big university back in February and they were facing 10 check fraud incidents a month,” said McMeekin. “In December they had more in the previous six months than the previous three years combined.”
Breaking it down, let’s first understand how contemporary check fraud works. An organization mails a check to pay a supplier and waits several business days for it to arrive and be cashed. However, criminals intercept the check, often stealing it from the mailbox using a key purchased on eBay. The criminals then visit state business registration websites to create fictitious business names.
This process is often instantaneous, taking advantage of the delay in detecting the crime. This gives the criminals time to act. Digital payments, on the other hand, are not only more secure from the outset, but also make any fraudulent activity much easier to detect quickly.
“In my experience, there is no single better way to quickly improve cash flow than to get rid of paper checks,” Bodine said.
When digitizing payments and paying suppliers electronically, processes become more efficient. Organizations can time their payments strategically, controlling when cash leaves the company, and may also access rebates available with certain electronic payment methods.
Virtual cards are a secure payment type used for paying suppliers the exact amount of the invoice or invoices due. They also offer rebates similar to traditional credit cards. The result is a range of benefits, including safe, faster, more trackable payments.
“We get a bunch of suppliers accepting these payments through the payment network,” said McMeekin. “What we see is that they can typically go from spending two hours a day on reconciliation down to something like 20 minutes.”
Four: Do More with Less
To preserve cash, organizations are asking their employees to do more with less. This often leads to frustration, cutbacks, extra hours, employee burnout, and inadequate tools for the job, ultimately impacting quality.
But there’s a way to do more with less—more effectively. Companies should reevaluate their processes with a fresh perspective and approach tasks more intentionally. It’s important to focus on working more efficiently, maximizing the value of current resources, and leveraging the skills within teams to boost productivity.
“I recently talked with a very decentralized, multi-site healthcare system who said our automation gave them 76 hours a week back,” said McMeekin. “They went from extremely overworked to a regular amount of work and spending less time on repetitive mundane tasks to more strategic initiatives like supplier sourcing, which is leading to a better culture.”
Five: Adopt an Enterprise-Wide Culture of Cash Excellence
The era of bloated, slow-moving organizations is over. Companies need to learn to do more with less and operate with the agility of a Formula One car, or risk being outpaced by competitors.
This requires an enterprise-wide culture of cash excellence, starting with integration and interoperability. Finance teams need to connect seamlessly across the organization, achieving integrated and automated bank connectivity.
“Every member of the team is going to do better work when engaged and feeling valued,” said McMeekin. “Organizations with higher rates of employee engagement have 18% higher productivity compared to companies where employee engagement is low. So you’re not only getting the results of automation, you’re also getting the results from added engagement.”
Gil added: “The excellence of cash is not just about how much you have today, but how much you’re going to need tomorrow. Are you preparing your company for what’s coming next?”