9/13/21, 9:16 AM Defining 6 Core Cash Management Challenges and Solutions | Coupa Cloud Platform for Business Spend

s Spend | Travel and Expense …

Defining 6 Core Cash Management Challenges and Solutions

BELLIN, A COUPA COMPANY
January 29, 2020  •  Read time: 7 mins  •  Beitrag auf Deutsch lesen 


Introduction

Any entity that experiences growth also experiences operational hurdles. And with companies who
have far-reaching subsidiaries, daily cash management challenges become apparent.

Think of it this way:

As children, our diets can consist of sugary drinks, french fries, and chocolate milk, yet we were still
able to operate at maximum speed.

As we grow older, the impact those nutrient-deficient foods have on our body becomes far less
forgiving.

More complexity, external factors, stresses, and just overall age has made it more important to keep a
watchful eye on our “operation” (diet).

https://www.coupa.com/blog/treasury/defining-6-core-cash-management-challenges-and-solutions 1/6
9/13/21, 9:16 AM Defining 6 Core Cash Management Challenges and Solutions | Coupa Cloud Platform for Business Spend | Travel and Expense …

For corporate treasurers, a growing company works in the same way. A poor structure or primitive
financial software no longer give you the proper nutrients you need to operate at maximum
efficiency.

Executing optimal daily cash management is a discipline that is heavily reliant on several business
units and departments across your company. This can be either stressful or linear depending on your
structure and technology.

Because of this, treasurers are tasked with ensuring there are strict workflows in place to minimize
the decentralized nature of incoming data, transparency, and banking information.

New solutions are constantly emerging that are intended to help simplify tedious or complex cash
management processes. While such solutions are simplifying the execution of those processes,
treasurers are being expected to expand their responsibilities. A study conducted by CFO Research,
“Next Generation Needs for Cash Management,” surveyed 371 CFOs, treasurers, and other senior
finance and treasury executives. The responses show a few notable tendencies and highlight that 
there is a general pressure to deliver on the expanding amount of responsibilities and complexity
treasurers are facing.

83% of the survey respondents said their company would need better forecasting and understanding
of its cash positions to succeed in the future. With such a large percentage of respondents seeking
improvements to their ability to execute effective forecasting and cash management, the availability
of process and technological solutions, such as TMS, are needed. In addition, emerging technology
promises additional support. An additional 76% of respondents stated they expect cash management
to become even more difficult over the next five years.

Cash management challenges

Here is a summary of the main challenges:

1. lack of forecasting speed and quality

2. redundant system and bank volume
3. tedious manual and error-prone processes
4. settlements or transactions in multiple currencies
5. regulatory changes
6. standardization, centralization and automation

 
Lack of forecasting speed and quality
The practice of cash flow forecasting is contingent on the input of various units across your
organization. Some units might be cash managers, financial controllers across different subsidiaries,

https://www.coupa.com/blog/treasury/defining-6-core-cash-management-challenges-and-solutions 2/6
9/13/21, 9:16 AM Defining 6 Core Cash Management Challenges and Solutions | Coupa Cloud Platform for Business Spend | Travel and Expense …

and many more. The reporting and forecasting accuracy is therefore dependent on that incoming
data.

Redundant system and bank volume

As companies scale and new units spring up globally, system and bank volume tends to continue to
increase. Localization can be an issue for a lot of these companies, and they require specific
technology that can tend to their needs better than others. This creates a decentralized nature
regarding the transparency of data and cash availability.

Tedious manual and error-prone processes

The physical execution of the individual tasks can lead to entry errors and a lot of time wasted.
Consolidating, inputting and checking the validity of data often takes up a large majority of time,
leaving scraps of time left to allocate toward strategic endeavors.

Two big hamstrings to quick reconciliation are payment processing times and lack of information
transmitted with payments. This gets further complicated when cross-border payments and currency
fluctuations are introduced.

Settlements or transactions in multiple currencies

As mentioned, cross-border payments and currency fluctuations further complicate cash

management.

Cross-border receivables can be costly and complex without proper workflows in place. The top
challenges associated with cross-border receivables fall into three broad areas: reconciliation,
currency-related complexities and sub-optimal payment terms. Consequently, currency rate
fluctuations can negatively affect your profit. 

Regulatory changes

Constantly changing laws, regulations and employment practices can make compliance a difficult to
ensure. For example, if your department lacks oversight of cash, counter party risk and existing
controls in a high risk jurisdiction, it might be a good idea to think about whether working in that
segment will yield any significant value.

Fraud, negligence, and lawsuits can spring about when a business is not compliant and there are no
internal controls to prevent such things.

Standardization, centralization and automation

https://www.coupa.com/blog/treasury/defining-6-core-cash-management-challenges-and-solutions 3/6
9/13/21, 9:16 AM Defining 6 Core Cash Management Challenges and Solutions | Coupa Cloud Platform for Business Spend | Travel and Expense …

It can be extremely difficult to standardize, centralize and automate cash management processes
when there are multiple banks, ERPs, payment systems, etc to operate. Without a centralized system
to synchronize various systems, standardizing and automating can be difficult.

Solutions to cash management challenges

Process restructuring and analysis

Understanding the cash management challenges is only the first piece of the puzzle. Implementing
effective solutions to negating challenges is where the value lies.

The first step in optimizing any process is analyzing existing systems and workflows to determine
where weaknesses lie. There are two recommendations here:

Holistic cash flow review – Before implementing a structured forecasting workflow, it is important to
review historic cash flows. This will provide valuable insights into the nature of existing cash flow
movements to help understand where flaws or discrepancies may exist.

Consistent data analysis and feedback – After implementing your new cash flow structure, the next
step is ensuring you have an automated or scheduled workflow to give users feedback on their data
accuracy.

Additionally, cash pooling and intercompany netting both play a role in establishing an in-house
bank, which is an overarching means of centralizing payments in a group, including Payments and
Receivables on Behalf of (POBO/ROBO) or cash pooling, simplified account structures and efficient
funding. 

Treasury Management System

Another strategy is in introducing a centralized treasury management system.

A treasury management system excels in removing many pain points regarding multiple banking
interfaces and systems with multiple banks by providing one centralized system to execute banking
needs. This commonly leads to a reduction in banking interfaces and harmonized processes that can
be centrally monitored

With process automation, a TMS can enable treasurers to improve cash forecasting and advanced
cash management. By reducing the amount of errors and time that manual processes demand,
treasurers can free up more time for strategy. 

Companies can create a process with a disciplined timeline for users to access and input
information directly in the treasury system, each user group owns and is accountable for the
https://www.coupa.com/blog/treasury/defining-6-core-cash-management-challenges-and-solutions 4/6
9/13/21, 9:16 AM Defining 6 Core Cash Management Challenges and Solutions | Coupa Cloud Platform for Business Spend | Travel and Expense …

accuracy of the forecast information. This solves the problem of decentralized units not being on the
same page.

Here at Coupa, we offer a web-based and dynamically integrated treasury management system that

excels in ensuring global visibility, maximized security and uncapped workhours saved. 

You gain:

An intuitive and flexible system to match your organization

A fully integrated solution that meets all corporate treasury requirements

Strategic insight based on real-time, reliable data

Group-wide efficiency, visibility, and transparency

Connect all global subsidiaries seamlessly with complete global collaboration

The ability to implement company-wide standards and workflows

Product: Coupa Treasury Management

Future Technologies

The future of cash management could see more improvement with emerging technology like APIs,
artificial intelligence, and advanced analytics.

APIs, or “Application programming interfaces,” provide a software connection for passing data from
one program or service to another; they are a means by which information can move into and out of
systems quickly and easily.

Predictive analytics techniques like statistical analysis, rich data modelling, real-time processing and
scoring can be used to detect trends for more efficient forecasting.

Conclusion
Cash management is a fundamental building block to many other treasury-related responsibilities so
ensuring it is executed optimally is imperative. By analyzing structures and implementing the right
technology, cash management efficiency and the fast availability of data is at your fingertips.

Time to discover Coupa's wide range of treasury services.

Recommended for You

https://www.coupa.com/blog/treasury/defining-6-core-cash-management-challenges-and-solutions 5/6
9/13/21, 9:16 AM Defining 6 Core Cash Management Challenges and Solutions | Coupa Cloud Platform for Business Spend | Travel and Expense …

How to Transform the Finance Rethinking Working Capital and

Function Payments

This eBook from Harvard Business Review This eBook provides a new working capital
provides a seven-point modern finance agenda framework for CFO’s to improve cash flow,
that supports successful digital mitigate supply chain risk, and build business
transformations. resilience.

Download eBook New Framework

2021 Coupa Software Inc. All Rights Reserved.    

Privacy Policy   |
  Cookie Policy  |
  Cookie Preferences

https://www.coupa.com/blog/treasury/defining-6-core-cash-management-challenges-and-solutions 6/6