Cash Management • 5 min read
Best cash management practices for remote CFO's
By Rajveer Singh
Published July 25, 2020
As the Covid-19 situation unravels, many crucial amendments are made by businesses to respond quickly to the challenges, but only to a certain extent within the reach of our imminent approaches. But slowly it's unfolding that the one presumed to be a temporary situation of remote work, could become a permanent reality.

Many day to day operations of our business are into turmoil as we go remote. Mangers are finding it hard to administer the workflow and assign tasks and at the same time, employees feel ambiguous about the work implementation.

With so many variables, at this point in time, it's insanely difficult to even predict what the global economy would like, say after a year from now.

The current economic crisis because of the pandemic is pushing companies to reconsider their staffing, spending, and the complete financial structure of the organization. The challenges posed by the novel corona virus are many and varied as some companies are losing more than 75 percent of their revenue in the first quarter of the year.

A survey conducted by McKinsey collected data from 1592 finance professionals across the globe, considering companies of various sizes and categories in the survey for a broader result. In the survey, 84% of the answerers stated that the virus was an imminent threat to the global economy. And the results were before WHO declaring it a pandemic!

Business leaders around the world are looking to the organization CFO's to advise and guide them to navigate through such unprecedented challenges they face as a result of the virus outbreak. And the CFO's will undoubtedly be the sailors here to help companies explore the new normal, and in this new normal, capital is not only the most important aspect, but also necessary to sustain the business operations and ensure its survival.


"For a business to survive, the operating costs must only be a small fraction of the revenue generated"



CASH FLOW MANAGEMENT AND FORECASTING

At the current time being, there's very little companies could do to increase their sales and revenue. The immediate challenge for CFO's is to deal with the decline in revenue and manage the company's limited monetary resources. But controlling these resources while the employees are working remotely is something far from easy. You cannot communicate precisely about the situation, and if you modify the company's spending policy, still employees implementing them in their practices would be a rare scenario. And even for employees, it could become very difficult to adapt themselves to this work from approach, as we must accept that we all are in a situation never witnessed before.

During such extraordinary times managing cash flow within the organization is essential and cannot be forsaken. Halted revenue should not result in paused operations. CFO's around must be having orders from top management to cut on costs anyhow. This could force you to take steps such as forcing finance teams to check every single expense with eyes wide open, and track every dollar that leaves the company. But this is obviously not possible and can overwhelm the finance guys. And as the last resort, you could end up cutting on salaries of employees, and further demotivating already humdrum teams.

But cutting on costs does not necessarily mean that you have to take any of those above harsh steps. Visibility and transparency are two aspects that could help you considerably to deal with the situation. But how to get these two values within your workflow?

First, you need to communicate. Not just a one-way communication, where you are throwing policy emails to your employees, and expecting them to implement without them asking any questions. You cannot make plans and implement various tactics without a deep understanding of how the business operates and how various employees contribute today. You need to understand what exactly the impediments have been on the employees and their work routine. Are they comfortable working remotely? Do they have access to all the tools they used to have with traditional in-office workings? Try to take their inputs on measures that can help your business save on your resources. Further, use this discovery process to build a healthy relationship with your employees. Include everyone from the department to contribute to the decision making process and act accordingly.

The next you can do is identifying inefficiencies. Track how company resources are distributed within teams and employees. If there is a hierarchical approach to incurred expenses or not. Try to figure out all the operational costs of the business including payrolls for staff, rents, marketing, insurances, travel expense, vehicle expenses, attorney wages, accounting fees, SaaS subscriptions, office supplies, etc. Once you get a firm hold on data about every expense your business incurs, you can plan your actions more efficiently. Accurate data about your business spends will be your shield while in a war with the financial crisis. There's no denying that you must be having the data regarding your expenses. But if you have to dig out into spreadsheets or old pale documents, this is something far from being optimal, and trying to fetch data like this is not a workable solution in the long and frequent term.


WHY INTERNAL CONTROL OVER CASH MANAGEMENT IS CRUCIAL

Your ammunition amidst this financial war would be the fiscal data and the ability to administer accordingly. Internal control over the company's cash is more crucial than blind shooting ways to increase revenue from sales. And at first, it could seem like monitoring over your financial resources is not a difficult task and could be taken out with ease. It is easy, but not without the right tools. And during these times, we all understand that every single dollar counts. Tracking with such level of precision using spreadsheets, is nothing less than impossible. Data visualisation is necessary for you to have a stronghold on the operations.

When it comes to managing the internal cash flow, there are various factors towards it. Concerning incurring expenses, majority organizations follow the spend and reimburse approach. To elaborate, employees, when they need to incur an expense for the company, they do it from their own pockets, later file the receipt for the expense, and then are reimbursed. Even reading about such a process depicts the tediousness of the procedure, and you know in terms of maintaining and accessing data regarding the expenses, how difficult it could get with the above practices.

Apart from being monotonous, the process brings with it an added risk of employee fraud. Receipts could be feigned and you won't notice anything.

And being remote as of now, it's even more difficult for the employees and the CFO. The employees are hesitant to make legitimate necessary purchases, say a SaaS subscription as they fear that the reimbursements would take a whole lot of time. Plus for the finance managers and the CFO, it's more difficult than ever before to communicate with the employees and ask them for their expense receipts. With limited resources in hand, the CFO needs to tailor a process that could ease the load of both the employees and the managers. Keeping in mind the constraints that we are all bounded within.

Therefore, during such times having a systematic procedure to manage the cash flow within the organization, between the teams is extremely crucial.


CASH FLOW MANAGEMENT SOFTWARE

A cash flow management software could turn out to be your biggest sail to help you glide against the economic tides. The general ingredients of a cash flow management software or expense management software includes physical and virtual payment cards. These cards are configured with a desktop and a mobile application.

Companies can distribute individual payment cards to every employee and can load money in them. Employee expenses could be vast and varied like travel expenses, SaaS subscriptions, entertainment allowances, team perks, marketing expenses, etc. Employees can make all these expenses through their individual cards with preloaded budgets that were set by the administration.

Implementing a cash flow management software replicates a hierarchical approach within the organization. An admin can monitor and control every expense in the company. He can allocate budgets to teams, and individuals. Whenever an expense is incurred on the card, every detail of the payment is presented to the admin on the dashboard in real-time i.e the time they are incurred. This boosts up the visibility and transparency of the financial workflow within the entire organization.

As we discussed above, accurate expense data is necessary for you to make agile decisions. An expense management software is something that caters to all your cash management issues. You don't need to stare at thousands of receipts or spreadsheets. Plus you can integrate an expense management system with an accounting software. Therefore the visibility and transparency comes with a great level of customizable control and ease in workflow.


The time it would take to switch your expenses to a cash flow management software is minimal, and it could be worth your future investment. Such software could drastically the efficiency and productivity of remote teams.

With context to general well-being, experts offer advice on how to react with agility, stay calm, be willing to let some things go, and focus on what's more important. Considering there are many leaders who are experiencing their first financial disaster, this advice is crucial.

If you are concerned about cutting your company's operating costs, it's perfect t time to switch to Volopay. With Volopay you will be acquainted with spending controls, instant visibility and transparency, bill payments, virtual cards, and rewards on spends.

And the most important thing. We're absolutely free! You won't be paying anything extra with Volopay. Users are entitled to exciting rewards and cashback while they spend through us.


We are standing with all businesses around the world to assist and help them in such uncertain times.


Book a demo today!


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