Growing Interest in Cashflow Management Software

Recently Wout van Wijlick Marketing Manager at treasuryXL?noticed an increase in interest in Cashflow Management software online,?as people recognize its importance in ensuring financial stability and growth.

This trend is also reflected in the global cash management market, as it is expected to grow at a rate of 12.6% annually, reaching an estimated value of $25.37 billion by 2027.

Such impressive growth raises the question of what is driving this increase. Wout asked treasuryXL expert Kurt Smith PhD what he thinks about what factors could drive this growing cash management market.

Insights by Kurt Smith PhD

Cash management and forecasting always come sharply into focus during periods of crisis, such as the GFC and COVID, where everyone is reminded that even very profitable companies become critically exposed to a lack of liquidity.?As a Consultant, I always bang the cash drum because:

• A corporate culture of cash-is-king, where everyone is responsible for increasing cash, drives long-term enterprise value;
• A lean operating cash level optimises working capital, and working capital is a key component of invested capital and thus the return on invested capital; and
• Excess cash is a signal of a lazy balance sheet and poor management to equity analysts and investors

Let's take a step back, and see what we are talking about here.

What is Cash Flow Management Software?

Cash flow management software is a specific tool designed to help businesses – particularly treasurers in this case – in tracking, analyzing, and forecasting their cash flow. This software provides them with real-time insights into a company’s financial health by:

• Tracking and aligning cash flows
• Automating various financial processes
• Provide a centralized platform for managing money going in and out of the company

This software is becoming more important for businesses, especially since 82% of small business failures are linked to poor cash flow management.

We asked Kurt Smith PhD how the adoption of cash flow management solutions has evolved in recent years and how it aligns with this striking statistic.

"There are a lot of cash flow management software options, from TMS’ to specialist offerings from FinTech and even banks, to the ubiquitous spreadsheets.? And spreadsheets truly are ubiquitous, even many treasuries with TMS download data from their TMS and ERP into spreadsheets for cash management!?

This is a very large operational risk because there are no protocols around spreadsheet editing, maintenance, and storage, there are no peer reviews, external audits, error messages or other protections against overwritten cells or formula errors, and control over data and data integrity is lost."

So, what are the current solutions you can use to address this challenge?

Tools and Features

We see that cash flow management software provided nowadays by these service providers typically includes real-time financial visibility and reporting, with custom dashboards and automated reports. Furthermore, it supports cash forecasting and planning by providing cash flow projections, scenario analysis, and long-term liquidity strategies. These features help you stay on top of your financial situation at any given moment.

Integration and automation features connect the software with bank accounts, accounting systems, and ERP systems, streamlining processes like invoice management and payment automation. Additionally, it includes analysis?tools?offering?tools for projections, scenario analysis, and long-term liquidity strategies.

Integration and automation features allow the software to connect with your bank accounts, accounting systems, and other business tools, making tasks like invoice management and payment processing easier and more efficient. Additionally, it comes with tools that help you make cash flow projections, explore different scenarios, and plan for long-term financial stability. If you’re interested in learning more, treasuryXL has a dedicated page on cash management written by our valued experts.

Choosing the Right Software

With so many options out there, picking the right cash flow management software can feel overwhelming.? It’s important to think about what really matters for your business.

Several of our treasuryXL partners provide excellent cash flow management software to help you out. Consider solutions like Nomentia, which excels in treasury and cash management; GTreasury, known for its wide range of features including cash management and financial risk tools; TIS, which offers cloud-based solutions for managing corporate payments and cash flows; and Cobase, which integrates various banking platforms into a single interface. Each of these options has its own strengths, so think about what fits best with your specific needs and workflow.

A last tip from Kurt Smith PhD for choosing the right software:

Treasury remit is expanding and treasury footprint is remaining constant or shrinking.?The key to adopting software is to consider the people-processes-systems ecosystem as a whole.?

Software becomes the compelling solution when connectivity to bank and trading platforms, and integration to ERP, are maximised, thereby enabling both an increase in productivity and a redirection from high volume, low value-add activity to low volume, high value-add activity.

However, be aware that re-engineering legacy analogue processes to digitalised processes with automation is time-consuming, and getting teams digital-ready can be a challenge if they are comfortable with the status quo.

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