Poor cash management is one of the main reasons nine out of 10 companies fail, according to Ernst & Young, making it imperative that financial officers focus on cash forecasting and automating cash management processes.
As businesses slowly recover from the recession, generating cash is not always enough to stay ahead of the competition. Having processes in place that locate cash within a business can substantially improve its bottom line, the Financial Times reports. Technology systems, such as duplicate payment audit software, can help finance departments ensure cash is not being lost to errors such as duplicate payments.
Board members need to know that a company has information systems in place that can signal refinancing needs and covenant breaches early in order to ensure that the company is in compliance with regulations.
As businesses become more globalized, cash management has become more challenging, notes the source. When the economy was stronger, many companies did not prioritize establishing daily visibility into the cash balances of overseas operations. Ron Kalifa, head of product management in the global transaction services division at RBS, told the source that managing accounts payable and receivable has become more challenging. This makes automation increasingly vital.