Better cash flow from improved cash management tools.

• Author: Mantilla, Jose
• Position: Treasury

No financial discipline is more important, and more misunderstood, than cash management. There are tools available to help businesses understand and implement cash management strategies, including how to maximize cash flow, assess their current cash position and evaluate investment account options.

Today's cash management tools are more user-friendly, with automated processes designed to compound efficiencies, provide added convenience and reduce risk. These tools save businesses time and money when managers take into consideration the gains from advances in sweeps, earnings credit rate (ECR), term investment deals, plus purchasing cards, remote deposit capture and payroll options.

Tools of the Trade: Liquidity Solutions

For businesses looking to effectively manage short-term cash, liquidity solutions--ECR, sweeps, savings accounts and term investment vehicles--are the best options. Liquidity solutions offer competitive returns to comparable investment solutions and afford bankers the ability to create custom portfolios with respect to a business's liquidity needs, investment objectives, risk tolerance and investment horizon.

Minimizing or possibly eliminating banking fees is one way for companies to maximize returns. Organizations should consider a managed ECR as a component of a balanced compensation program. ECR allows companies to offset some banking fees by allowing them to maintain a balance on their accounts.

Another option is the utilization of what are known as sweep accounts, designed to invest the excess money from an account once all payments have been made. Account types vary based on a company's needs. Some are designed for companies seeking maximum return on investment, while others are focused on providing maximum security.

Other liquidity options include fixed-income securities, savings accounts, certificates of deposit (CDs) and money market accounts. These term investment vehicles are structured for clients with core balances and do not require overnight liquidity or seek additional interest income.

Technology as a Cash Management Resource

Technology has essentially changed the way we bank today and serves as the platform for numerous cash management tools. These innovations have resulted in efficiency and savings to businesses.

Remote deposit capture, which some consider to be one of the most significant banking innovations in decades, has taken the market by storm. This technology allows businesses to utilize desktop...