Going remote has been like someone pressed the reset button on all business and financial operations. It has created the need for companies to revisit all business functions from scratch to make necessary changes to stay afloat.
Additionally, remote work has brought about broken processes and workflows, zero accountability into finances, and no control or visibility into expenses to the surface. This, coupled with distributed teams, weak communication channels, and traditional means of handling expenses, spells trouble for business finances.
But where do companies start with fixing this problem?
This blog helps navigate through these tricky aspects of cash management and business finances. It also provides ways businesses can stay afloat even during these testing times. So, let’s get started!
Challenges with remote cash flow management
Let’s start by saying traditional cash flow management is already a chore for your Finance teams. Add the layer of remote work to it, and you have a disaster brewing right around the corner.
To build our case, given below are some cash flow management challenges that worsened with remote work:
1. Lack of communication and collaboration
Finance as a function is dependent on all other departments to get work done. Thus a lack of smooth collaborations may lead to teams succumbing to lengthy and redundant processes with no reward. This has an impact on overall employee and financial productivity.
2. No visibility or control in company finances or expenses
With paper-based reports and in-house meetings off the chart, Finance teams lack the information, insight, or time to make the right decisions concerning company finances. Unfortunately, this means no cost optimizations or rectifications around budget allocations, policies, and expense management.
3. Need to relook business expenses and policies
Remote work has changed the type of expenses businesses incur. Unfortunately, it has also made old/existing expense policies redundant as they do not cover newer business expenses. This makes expense management a chaotic experience for all. It also leaves Finance teams with little to no knowledge about the ins and outs of business expenses.
4. Traditional processes that break with remote work
Gone are the days where employees or Finance teams could just walk into the next room for instant clarifications or rectifications. With remote work, processes that demand physical human interaction instantly fall to the ground.
Additionally, they result in broken, inaccurate, and time-consuming manual processes that open doors to financial leaks that affect business finances. Take expense fraud, for instance.
Thus it is safe to say, if these factors go unnoticed, they can further affect all other business processes, as healthy finances and cash flow are the crux of any sound business.
Where do companies start with remote cash management?
Analyze and gain insight into the current cash flow scenario, business financials, and overall state of financial processes.
Note what has changed and its impact on the daily operations around financial processes & management.
Classify and tag challenges into categories with priorities such as operational, non-operational, and departmental.
Encourage teams to leverage automation-driven technology to solve mundane and repetitive problems.
A good start would be the automation of expense management, payroll, and AP & AR.
Ways businesses can effectively manage cash flow in a remote setup
Cash flow management essential dwells around having a well-rounded picture of your business finances at all times. This could be around expenses incurred by departments, teams, individuals, and even processes and operations.
Thus businesses must pay close heed to processes and find ways to course correct. Here are some easy ways to start with creating an effective financial management system for your business:
1. Understand the current state of business finances
Finance teams can only make informed data-driven decisions when they have the data, to begin with. Thus before jumping into preservation mode, Finance teams need to understand the current state of their financials. This could include income statements, AP & AR, expense management, and P&L statements.
2. Gain a grip on business spend and finances
With the data in hand, Finance teams can now conduct deep dives to understand where most spending is happening, why it is happening, and how to control or optimize it. Based on this information, Finance teams can then make informed changes to expense policies, budgets, and more.
3. Remove human intervention where needed
Let’s face it; there are some things better left to technology than human beings. For instance, take manual data entry, manual verifications, and even manual approvals in the expense management process. Letting software do these mundane tasks not only frees up time for your employees but also adds a layer of accuracy and certainty to the process.
4. Leverage automation-driven technology
For remote teams to function, businesses need to move to automation tech to do the heavy lifting instead. It streamlines and automates all mundane and repetitive tasks and provides data-driven insights and guaranteed policy compliance. This enables businesses to eliminate financial leaks in the system.
Some technology businesses can start with:
- Cash flow management software – manages the ins and outs of business funds with zero human effort.
- Cash forecasting software – helps with real-time analysis of data for accurate financial predictions.
- Expense management software – manages business expenses, corporate card reconciliations, and reimbursements.
- AP & AR automation software – digitizes vendor invoicing, AP & AR workflows, and more.
5. Redefine and enforce revised remote expense policies
Redefining how employees submit expense reports and how approvers and Finance teams verify and process reports are crucial. Start with stringent policy revision and enforcement to make the entire expense management process more manageable and straightforward for both the employees and Finance teams. This would also gear the whole company to manage and control business expenses efficiently.
6. Look for cost-cutting and cost-saving opportunities
If your business were to use an automated expense report software, it could benefit from the software’s advanced data analytics feature. This would mean a detailed breakdown of all expenses across departments, cost centers, top spenders, spend categories, frequently associated hotel and airlines chains, and more. This would help Finance teams with insights to optimize or reduce costs via discounts, deals, renegotiations, and more.
With the pace at which businesses have to adapt to the changing times, we suggest you begin by cleaning up broken processes and making a list of things that need immediate tending.
Then consider switching to technology-driven software to do tedious and error-prone tasks. For example, you could use an expense software that automates your entire expense management or a cash flow management software that always has a keen eye on your business finances.
Every business owner and leadership team has to decide what changes to push for depending on their stage, the severity of problems, and other such parameters. The point is you start the conversation around change.