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Top cash management issues & payments mistakes to avoid

Accounts Payable
Global Payments
Unified Treasury
Financial operations
Karolina Jarosinska
April 22, 2024

Global businesses face a dynamic and ever-changing financial landscape. Despite technological advancements, many companies lack the data and systems required to ensure long-term financial health, stability, and continuity, which are crucial for steering growth in the right direction. Financial and treasury departments often fall trap to the same cash management and payment mistakes, such as inadequate visibility and reliance on outdated systems and processes. These issues can negatively impact bottom lines and hinder further growth.

In this article, we discuss the top cash management and payment mistakes global businesses make that prevent them from increasing operational efficiency on a global scale and stifle their ambitions for expansion.

1. Lack of visibility into cash

Managing cash and working capital effectively requires visibility and treasury management across all institutions, currencies, and companies to ensure smooth operations and financial stability. The more a company grows, the more banks and financial institutions it has to deal with, which makes it increasingly difficult to get complete and real-time insights. A recent survey by Blackline found that 62% of respondents believe that understanding cash flow in real time is more important than ever before, especially in the midst of economic uncertainty. Nevertheless, nearly all participants wished for greater confidence in their cash flow data.

A major problem lies in the time-consuming process of aggregating data from disparate sources. By the time it’s consolidated it often becomes outdated - and nearly half of companies worry about making financial decisions based on outdated information.

2. Outdated and manual systems and processes

Despite technological advancements, many companies still rely on outdated processes and manual systems to manage cash and payments. Using spreadsheets and manual payment execution leads to inefficiencies and increases the risk of errors and fraud. Manual processes are prone to delays, which can cause issues with cash flow and working capital, impact client and supplier relationships, and hinder timely response to market trends.

Moreover, the lack of encryption and security measures in manual systems exposes financial data to manipulation and fraud, posing significant risks to businesses' reputation and financial integrity.

The burden falls on the financial team to navigate these challenges, diverting their valuable time and resources away from strategic initiatives.

3. Payment inefficiencies

A recent article by Forbes revealed that, similarly to cash management, a vast number of companies still rely on manual payment execution for both local and international payments. Over half of global businesses rely on manual payment processes and lack digitization, while over 40% have disconnected payables and receivables processes. The problem arises from the fact that an international company needs access to multiple currencies and financial institutions.

In the absence of an efficient system, each payment must undergo multiple approvals internally and, when sending or receiving money internationally, it also involves multiple intermediaries, giving little visibility to the status of payments once they have been expedited. Using manual processing can lead to wasted time and errors, as well as a negative impact on the bottom line of a company since fees are incurred at each stage.

Furthermore, fragmented payment workflows create opportunities for fraudsters to exploit security gaps, exposing businesses to financial losses and reputational damage. Lack of consistent approval processes and controls exacerbate these risks, highlighting the urgent need for integrated payment solutions.

4. Lack of integration between payments, AP and AR

The lack of integration between accounts payable (AP) and accounts receivable (AR) processes further exacerbates inefficiencies in cash management and payments. Disjointed systems and manual workflows contribute to delays in processing invoices, reconciling payments, and optimising working capital. Streamlining AP and AR processes through automation can accelerate payment cycles, enhance visibility, and empower treasury teams to make informed decisions. Integrating enterprise resource planning (ERP) systems and accounting tools enables businesses to consolidate financial data, gain insights into cash flow, and track revenue more effectively. By automating reconciliation processes and segregating incoming funds, businesses can obtain a real-time view of their financial health and identify areas for improvement.
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The solution

Investing in a technology stack that solves end-to-end accounts payable and receivable, automates cross-border payments, and unifies treasury for complete cash visibility is the solution to all the above. Connecting all your tools through an API ensures the data flows seamlessly between them, ensuring you always have an accurate and up-to-date view of your financial information.

An alternative would be to invest in a financial operations platform such as Fyorin that combines international payments, AP, AR capabilities and treasury management under one roof. In this way, your business can save money on multiple tools and your financial team will be able to handle all financial processes using just one system, ensuring all data is accurate and up-to-date. Interested in bringing all those critical financial operations under one roof and never making the same payments and cash management mistakes again? Get in touch with us at [email protected] or book a free demo.

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Karolina Jarosinska
Product Marketing Manager
Karolina is the product marketing manager at Fyorin. She deep dives into topics like fintech, payments, unified treasury to extract the recent trends and insights and bring them to Fyorin's audience.

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