Your cash management processes can play a big part in the operational performance and resilience of your business.
A recent study by EY-Parthenon found that of 5,000 of the top largest public companies tracked globally, those with better cash management were 19% more resilient than their low-performing peers while 21% were better at limiting initial shocks caused by market downturns.
From a Operations Director’s perspective, there are some critical points for managing cash performance and profitability. Let’s look at each of these points in terms of their impact on cost management, cash flow and overall profitability.
of the top 5,000 largest public companies globally, those with better cash management were 19% more resilient than their low-performing peers while 21% were better at limiting initial shocks caused by market downturns.
Cost Evaluation: Thoroughly assess operational costs
Analysing costs is the basis of effective cost management. By scrutinising all operational expenses, you can identify areas where costs can be trimmed or eliminated.
It’s vital to regularly review any expenses linked with cash handling processes, including human resources, security, and transportation costs. Identify where those costs can be reduced, such as optimising cash pick-up schedules to minimise transportation expenses.
Cost Reduction Goals: Set clear objectives for cost reduction
Setting specific, measurable cost reduction targets provides a clear direction for your business. It helps in tracking progress and ensures all your internal teams are aligned with the goal of improving profitability.
For example, set a specific target to reduce cash handling cost by 10% over the next quarter. This goal could include reducing overtime for cashiers and implementing more efficient cash counting methods. Setting goals always helps communicate priorities across the business and gets things done.
Efficiency Optimisation: Streamline processes for resource efficiency
Optimising operational processes not only reduces costs but also enhances productivity and resource utilisation.
A unified solution incorporating front-end and back office hardware solutions, like integrated cash recyclers and smart safes, and cash management software is recommended.
This can then be seamlessly integrated with other systems in the company or organisation to create a real time view of cash in line with other operational systems. This further will drive efficiency gains and profitability.
Enhanced Security
Cloud-based solutions also offer enhanced security. With strong encryption, multi-factor authentication, and continuous monitoring, sensitive financial data is kept safe from unauthorised access and the opportunity for breaches are reduced.
This elevated level of security helps organisations to maintain trust with your customers and partners, ensuring financial data is well protected.
Cloud connectivity creates cost efficiency by eliminating the need for expensive on-premises infrastructure reduces upfront costs and makes sophisticated cash management tools accessible to any organisation.
Technology Integration: Implement automation and tracking
You may be surprised by how much technology can do for the efficiency of your cash management processes. It can automate repetitive tasks, reduce human error, and provide real-time data for decision-making. This leads to cost reductions, improved operational efficiency, and better profitability.
For example, investing in cash management software to automate cash counting and reconciliation can also provide real-time visibility into cash levels and transaction data. This can reduce labour costs and improve accuracy.
Cash Flow Forecasting: Improve accuracy for better liquidity
Accurate cash flow forecasting is crucial for maintaining liquidity. By predicting future cash flows, you can make informed decisions about investments, debt management, and ensure there are no unexpected shortfalls.
You could use historical data and cash flow forecasting tools to predict cash needs accurately. This ensures that you maintain the right amount of cash on hand to meet operational requirements without excess, which could be used elsewhere in the business.
Continuous Improvement: Foster a culture of feedback
Cultivating an ‘always on’ feedback loop between front-line employees, operational teams and the back office, ensures that cost-optimisation measures are not just one-time efforts but an ongoing practice. Regularly reviewing and optimising costs can help sustain profitability.
Cross-Functional Collaboration: Work across departments for resource optimisation
Collaborating with other departments is essential for resource optimisation. It ensures cost-saving measures are implemented throughout the organisation, not just within the operations team.
Engage with the finance department to align cash management practices with the overall financial strategy to ensure cash is allocated optimally between different functions and departments.
Risk Mitigation: Implement strategies to minimise financial risks
Identifying and mitigating financial risks, such as market volatility, supply chain disruptions, or regulatory changes, is crucial for protecting profitability. Effective risk management strategies can prevent unexpected financial setbacks.
Example: Develop and implement security protocols to safeguard against cash theft or fraud. Additionally, establish contingency plans for situations like natural disasters or other emergencies that could impact cash holdings.
Cultivating an ‘always on’ feedback loop between front-line employees, operational teams and the back office, ensures that cost-optimisation measures are not just one-time efforts but an ongoing practice.
Implement PayComplete’s technology solutions for automation, tracking, and enhanced cash management, helping you increase resource efficiency while lowering costs.
The PayComplete offering
PayComplete offers technology that streamlines cash management processes. Operations Directors can implement PayComplete’s technology solutions for automation, tracking, and enhanced cash management, helping you increase resource efficiency while lowering costs.
You can set clear objectives for cost reduction that are supported by PayComplete solutions through automation, enhanced security, and streamlined cash handling practices.
To help your foster a culture of ongoing cost control, PayComplete offers adaptable solutions that support continuous refinement of your cash management processes.
Conclusion
Effective cost management, cash flow forecasting, and risk mitigation strategies are key drivers of profitability. By implementing these practices and fostering a culture of cost control and efficiency alongside bleeding edge software and hardware solutions, you can make an important contribution to the leadership and overall success of your business.
