Some small businesses don’t have the financial and administrative skills to handle all human resources and accounting functions. So, they usually outsource these tasks to other companies. Prominently, cash management services help startup or small firms better handle their finances, especially the cash flow.
List of Services
Banks provide some of the best possible resources for cash management. These tools help to manage cash efficiently, and at the same time, minimize risk. Some of the most common services on offer include, but are not limited to, the following:
- Account Management
- Deposit Options
- Electronic Payments
- International Banking Services
- Card Services
- Risk Management
- Account Reconciliation
- Armored Car Services and Cash Collection
- Balance Reporting
- Cash Concentration Services
- Sweep Accounts
- Wire Transfer
- Zero Balance Account
Receivables and Payables
For small companies, which have a cash flow but don’t have any more sophisticated needs, there are also the receivables and payables cash management. Receivables cash management starts with the invoice, which is treated as a receivable. In the ledger, the receivable is moved to the cash column when it’s paid. However, it may take from 30, 60, or 90 days between the invoice and the receipt of the check payment, which is also called the float. Reducing the time between invoice and payment helps to make the cash flow go faster.
In the same manner, improving the cash flow of payment for goods received or sold can also see improvements in the bottom line. A common business practice is to keep the float in a manageable level. The float allows the company to budget its cash. At the same time, keeping a manageable float helps the company’s reputation with its suppliers.
Cash management is an important part of the accounting and investment process. There are various services automating this process and help ensure that the cash doesn’t fall through the cracks. Payments and collection should work hand in hand with proper cash management.