Treasury Management Software

In simple terms, a company's cash flow is the money it has available to run its day-to-day operations. It also has to cover expenses, both general ones (salaries, rent, purchasing or leasing equipment, for example) and, above all, very specific ones. These are notably linked to existing relationships with third parties — whether advisors, suppliers of products or services, or partners — with whom it carries out business transactions involving financial operations subject to regulated payment terms.

Ideally, a company should be able to rely on a reserve of liquidity when it assesses its finances once revenues are recorded and expenses factored into the balance sheet. Seeking balance is generally not an end in itself for an ambitious company, which will systematically look to generate surplus cash and consider the best ways to put available funds to use. Conversely, the balance sheet may show a cash shortfall, in which case the company will also need to ask itself the right questions to get through a temporary liquidity crisis and rebalance its budget.

So while a company can manage its budgets sensibly to avoid surprises and setbacks, it must above all place treasury management at the heart of its growth strategy. It needs to be able to build cash inflows and outflows into its short, medium, and long-term financing plan to ensure its various departments run smoothly and to secure its future.

As the entrepreneur's goal is to grow the business, smart management of its liquidity will let them free up part of the budget to reinvest the money generated by operations — increasing revenue streams by adding new products and/or services to the portfolio.

Well supported by a treasury management specialist, they can benefit from expert advice, someone able to flag opportunities created by available liquidity at any given moment — as well as the risks that come up when cash runs short and certain debts can't be settled on time.

A liquidity crisis is a difficult situation: an inability to meet debts owed to creditors, which can have disastrous consequences for the company's image externally, and can also undermine the trust of its own employees internally.

To avoid getting into this kind of situation, it's essential that the treasury team, equipped with the right monitoring and analysis tools, has a real-time view of the company's financial position. They also need to be able to anticipate short-term deficit scenarios and propose ways to resolve them as quickly as possible.

• Bring in or train someone within your company to take charge of treasury management. If, because of company size or budget constraints, this person can't dedicate themselves to it full-time, make sure the responsibility is still built into their job description.
• Spot treasury issues early by running daily checks on your bank account balances. If needed, cut easily identifiable, unnecessary operating costs to boost your liquidity.
• Make sure you properly assess your working capital by drawing up a concise schedule of recurring cash inflows and outflows. Adjust your payment or collection deadlines so they line up as closely as possible, avoiding overly large swings in cash flow.
• Automate your management and forecasting with tools specifically dedicated to treasury management that integrate your account statements, generate alerts, and provide detailed reports and analysis of your budgets.
• Don't overlook the human side — stay in touch with your banking partners to negotiate overdrafts, interest rates, or get advice on profitable, low-risk investments, for example.