How Startups are Optimizing Cash Management

How Startups are Optimizing Cash Management

Getting on the digital trend has proved to be a boon for businesses, especially the startups.

Most of the Start-ups today need to manage finance & accounts processes on the one hand & expanding business & operations on the other hand. In this entire cycle, managing finance becomes a laborious & tedious work. This critical function with its challenges slows down the business growth. Thus, the role of Finance & Accounts is crucial in providing the right amount of financial fuel in propelling business growth.

The situation becomes complex when multiple Business Units (BU) grow in geographically spread out locations – the typical challenge of retail & E-Commerce companies, or companies having distributed model. The Business will need cash for expenses, else business will suffer. On the other hand, having higher cash at Business Units implies squeeze on precious working capital. The balancing act of having the right amount of cash in each BU is a tough one for all CFOs. In such a situation, there is an urgent need of comprehensive & cost effective solutions for last mile cash management, disbursement, accounting & control over cash expenses.

We have seen that most of the startups in India conditions are similar when it comes to cash management. The companies adopt a manual approach in every aspect like hard copy approval, physical movement of vouchers, manual controls, long processing time, no tracking of vouchers & loss of vouchers in transit. The solution to this entire critical problem is adopting integrated solution for cash management. Startups require an end to end solution which includes –

  • Process for Cash Control with Self Disciplined Audits & Certification Mechanism.
  • Electronic Document storage & retrieval
  • System monitoring of last mile cash level to trigger electronic cash refills, in time, to eliminate cash out situations and optimize working capital
  • Centralized Process for processing/audit of cash expenses in Shared Services Model
  • Centralized query management desk
  • Data integration with client ERP

But does cash management benefit the startups?

The answer is yes.

We have observed that  cash expenses in startups was reduced by 20% in 6 months through effective audit & control process, reduced working capital by 15% over 3 months, while eliminating cash out situations that were leading to business loss. In addition , elimination of  physical movement of cash to last mile through system monitored refill process provides extra dividends.

Startups were able to adhere to company policy through electronic workflow process with built in company policy-wise matrix. We also built Enhanced Satisfaction Index (SI) at Branch/DP level with effective query management & Zero Capex solution, provided in completely scalable model.

Thus good cash management is king and the benefits are evident as startups have adhered to operating with the aid of technology. Therefore, an automated approach to cash management is quickly emerging as an efficient way to tide over rough patches and to re-emerge profitable for years to come.

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