7 Ways to Optimize Your Global Cash Management 

When a company’s cash and liquidity management is inefficient, CFOs struggle to make accurate decisions due to incomplete or inaccurate data. Because these numbers are all over the place, either the treasury team wastes hours and hours just combing through different databases, or the CFO ends up hiring external experts to analyze the company’s data. So much time is wasted trying to figure out the right numbers that paralysis sets in, and the company misses out on crucial investments.  

According to PwC’s 2023 Global Treasury Report, CFOs and Treasurers are struggling with inaccurate cash flow forecasting and access to funding and liquidity. Global treasury departments are now recognizing that centralizing cash management is no longer an option. It also can no longer be the sole responsibility of the finance team, and departments can no longer operate like islands. 

Optimizing how a company monitors its cash inflows/outflows and maximizes its working capital is the first crucial step to staying competitive, grabbing opportunities, and preparing adequately for market disruptions. With improving financial technologies, this task is more attainable than ever.  

Here are some strategies to optimize your global cash management:

1. Adopt a company-wide cash management discipline.

We all understand the importance of establishing a mission/vision for any business. However, it’s equally important to set operational goals that prioritize efficient cash management. For a company to stay on top of its cash visibility and position, all departmentsーfrom sales to marketing to inventory to financeーshould follow a standardized policy and system for managing orders, payments, and collections. One potential solution is to partner with cash management software companies to automate, integrate, and connect your databases and platforms.

2. Know which metrics to monitor.

An effective way to establish a solid cash management system is to be clear about what key performance indicators (KPIs) to track, including how to determine if a company is hitting its targets. Below are some of the metrics to consider: 

• Cash conversion cycle shows how many days it takes to convert inventory investments into sales. 

• Operating cash flow measures the company’s ability to pay its bills or operational obligations. 

• Comparing accounts receivable versus payable is essentially determining how much money comes into your business versus how much goes out. 

• Net change in cash shows how much cash value has changed within a specific period. 

• Free cash flow is the money left after paying all financial obligations.

3. Centralize cash visibility and cash positioning.

Once you know your KPIs, the next step is to ensure everyone is on the same page. It’s impossible to know your cash flows in real time if you have three teams trying to consolidate five databases across ten accounts. Having a centralized dashboard that consolidates all your cash, financial instruments, debt, and risk exposures ensures that everyone is uniformly updated. Plus, you’ll have a unified view of all your accounts and a detailed log for more transparent audit trails. Because data capture, recording, and retrieval are automated, you’re assured that your data is accurate and reliable. GTreasury takes this to another level by providing interactive screens and enabling drill-down and slice-and-dice views.

4. Quickly identify and maximize idle cash.

The beauty of centralized cash management is that you can be notified if idle cash is sitting in low-interest accounts. This means you no longer need to rely on your banking partners to manage this extra cash. Instead, you can use it to fund high-value projects, invest with higher returns, or pay debts to reduce interest costs. There are also cash management systems that automate sweeps and scenario modeling so you’ll know exactly where to invest. For example, GTreasury’s platform can automate idle cash transfers into high-yield, short-term investments and place cash based on customizable rules and policies.

5. Improve cash forecasting accuracy.

Cash forecasting estimates cash flow within a specific period. It not only minimizes idle cash but also predicts future liquidity requirements based on market conditions. This is such a crucial process, yet many businesses don’t prioritize it or use manual methods. As a result, CFOs are forced to request data and analyses from internal partners. Prioritizing accuracy ensures you’re not caught off guard by any risks or disruptions. A cash management solution provides this accuracy through real-time analyses driven by artificial intelligence, which can capture unusual patterns or emerging trends for proactive mitigation.

6. Establish in-house banking and intercompany netting.

Setting up an in-house bank that handles all financial transactions and processing can help you have tight control and oversight of your global bank accounts and subsidiaries. Additionally, an internal bank can aggregate all your cash balances into a single account, known as cash pooling, to help you avoid multiple transaction fees. An in-house bank can also facilitate intercompany netting, where receivables and payables among subsidiaries are processed in a single batch. This practice can prevent exposure to foreign exchange fluctuations. For example, GTreasury streamlines in-house banks by pairing them with payment solutions that can manage foreign debt and lending to eliminate FX fees.

7. Prioritize bank and ERP connectivity.

All technology and centralization investments will be wasted if these tools and systems are not interconnected or easily accessible. Open Banking application programming interfaces (APIs) or apps have made it possible for different software and enterprise resource planning (ERP) platforms to share data in real-time. For example, you can connect SAP with a treasury management system (TMS) to integrate operations and treasury functions. This means you’ll only generate a report once, and these datasets will be automatically consolidated for a holistic analysis. Meanwhile, bank connectivity ensures that your TMS is integrated into your bank’s API so you can have real-time reports of your transactions for cash visibility. GTreasury’s ClearConnect facilitates bank and ERP connectivity through its 80+ API calls to give the most flexibility to businesses. 

Conclusion

Optimized cash management is the foundation of financial stability. Ensuring this foundation is rock-solid will pay off in terms of long-term sustainability and growth. Partnering with cash management software companies can help you automate your liquidity and cash flow operations. 

Schedule a demo today to explore how GTreasury’s cash management solutions can help you stop second-guessing your data and be confident in your decisions.  

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