Cash Management: Tools to Help Your Oklahoma City Small Business

A viable cash management system can help ensure that your business always has cash available—for whatever its needs may be. Whether speeding up the collection of accounts receivable, reducing overhead costs, or optimizing funds available, good cash management can make you less reliant on financing and less susceptible to swings in cash flow, improving your business’s resiliency.

The goals of good cash management, though clear, can be complex to achieve, especially as your business grows and has more sources of income—and more expenses. That’s why using robust cash management tools can be essential for small businesses to effectively monitor their cash flow. In this post, we’ll explore the basics of effective cash management, discussing the most common financial tools available to assist small businesses in navigating their cash flow and maximizing their income.

What is Cash Management?

Cash management is the practice and process of handling a business’s liquid assets. This includes money flowing in and money flowing out. Effective cash management creates strategies and systems to help ensure that outflows of cash never exceed cash inflows.

Common business out flows include:

Payments to vendors
Worker pay and benefits
Taxes
Rental and lease payments
Loan and interest payments
Capital expenditures
Utilities
Office supplies
Costs of Goods Sold (COGS)
Professional fees
Marketing costs

Common business in flows include:

Sales revenue
Accounts receivable collections
Loan proceeds
Sales of assets
Grants and subsidies
Tax refunds
Rent

Businesses can use a variety of financial tools—often called “cash management services”—to monitor their cash flow and maintain or increase cash on hand, as needed. Cash management isn’t about shirking payment responsibilities, rather ensuring that you are collecting payments owed to you and receiving other forms of income before you need to make payments to others, so that there is cash available to cover your costs.

What can effective cash management do?

Businesses often operate on relatively thin margins, without a lot of room for error. Funding major capital expenses and investments may require financing to spread costs over time. And it’s crucial to have sufficient cash on hand to cover obligations, from worker benefits to loan payments. These are just a few of the reasons why it’s important to have a well-considered and realistic cash management plan.

So, what can effective cash management do for your business?

Keep your business alive.

According to SCORE, 82% of small businesses fail due to cash flow problems. These problems, which “can result from a lack of funding, poor budgeting, or inventory management issues,” can be alleviated by proper cash management strategies that monitor expenditures and grant business owners the insights they need to make crucial financial decisions.

Optimize accounts receivable.

By creating more efficient billing and collection processes, ensuring timely invoicing and follow-ups on outstanding payments, cash management tools can reduce the cash conversion cycle.

Reduce costs.

Cash management tools can help you minimize interest costs on borrowing by reducing dependence on financing. Additionally, these tools can automate routine financial tasks, streamline payment processes, and facilitate electronic transactions, leading to more efficient and affordable operations.

Maximize excess cash.

If you are in the position to have an abundance of cash at any point during the year, you can increase the viability of your business by properly utilizing that cash. Whether it’s paying down a high-interest loan, setting aside for upcoming tax payments or balloon payments, buying equipment to increase efficiency, or investing, cash management can help you allocate extra funds in the ways that make the most of your dollar.

Cash Management Tools to Increase Your Operational Efficiency

As we mentioned earlier, there are numerous tools available to manage your cash flow and improve operational efficiency. Let’s take a look at a few common cash management solutions available at financial institutions in the greater Oklahoma City area, including F&M Bank Oklahoma.

Online Banking

With online banking, you can manage your business bank accounts from anywhere, completing common transactions and monitoring your balances. Online banking can allow you to:

Keep an eye on balances
Transfer funds to and from cash reserves, as needed
Export reports to accounting software
Access additional cash management tools…

Online Bill Pay

Online BillPay, a feature of online banking, can be an important asset in managing cash outflows. With online bill pay you can:

Make payments to vendors quickly and efficiently in one centralized location, without needing to order and mail checks
Schedule payments for optimal times to better balance cash flow
Take advantage of advanced security measures, reducing the risk of identity theft or fraud associated with paper checks.
Improve record keeping with a documented history of payments

Remote Deposit Capture

Making regular trips to the bank to deposit checks can eat into your valuable time. And the fewer trips you make to the bank, the longer it will take for you to access your funds, and the more likely a check will be lost or stolen. With remote deposit capture, you can securely transmit images of checks into your bank account without needing to make trips to the bank. Remote deposit capture allows you to:

Deposit checks right from the office, on your schedule
Reduce time spent at the bank
Offers comprehensive reporting on deposits and images and are archived electronically
Reduces courier fees
Access your funds faster, with same day processing

ACH Services

Automated Clearing House (ACH) services for businesses facilitate electronic payments and transfers of funds between bank accounts—yours, your employees, your vendors, and your customers. These services help businesses efficiently process payroll, vendor payments, bill collections, and other transactions electronically, reducing the need for paper checks and streamlining cash management processes. With ACH Services, your business can:

Automate bill pay and payroll direct deposit to hold on to cash as long as possible
Make it easier to receive payments, improving cash inflows
Send and receive payments quickly and affordably, with most payments clearing within 1-3 days
Facilitate accounting practices with simple and accurate transaction records
Eliminates check floating giving less risk for fraud
Streamlines reconciliation

Merchant Card Services

For retail businesses and services that routinely accept direct customer payments, in-person or online, merchant card services are essential. When you sign up for merchant card services, you’ll be provided with a point-of-sales system that can allow you to accept various methods of payment, meeting the demands of today’s customers. With Merchant Card Services, you can:

Accept major debit cards and credit cards
Process payments from popular mobile payment app platforms including Apple Pay, Google Pay, and Samsung Pay
Accept gift cards
Create and utilize customer rewards and loyalty programs
Accept payments at your brick-and-mortar locations, on the go at special events, or through your online store front

Business Lines of Credit

From real estate loans to equipment loans, any sort of business financing is effectively a cash flow management tool, allowing you to spread payments for larger expenditures over time and minimizing the impact of the purchase on your monthly budget. However, Business Lines of Credit are specifically designed to smooth cash flow, ensuring that you always have capital available to meet your obligations—even during your low times. Use a Business Line of Credit to:

Bridge temporary gaps in cash flow during the month
Smooth seasonal cash flow fluctuations
Reduce interest costs over higher-interest credit cards and short-term loans
Obtain quick and flexible access to funds, seizing opportunities and providing a safety net for unexpected expenses or market changes

Use Cash Management Tools from F&M Bank to Support Your Business

Effective cash flow management is a continuous and crucial process necessary for keeping your small business thriving. With the complexity of today’s accounting, having the right tools in your financial toolkit can simplify your cash flow management, reducing costs and making the most of every dollar earned.

Looking for effective cash management options paired with dependable, local service? Speak with an expert at F&M Bank Oklahoma to see how our Cash Management Tools and Small Business Services can help your company stay ahead of the curve.

Online Banking

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