5 Cash Management Solutions for Small Business Owners

5 Cash Management Solutions for Small Business Owners

5 Cash Management Solutions for Small Business Owners

Cash management refers to the way businesses handle and track their cash flows coming in and going out. There are a lot of technology-forward cash management solutions provided by banks and other financial institutions that simplify the cash management process for businesses. Here are our favorite options that can help your small business manage its cash flow. 

1. Online Payment Solutions

Gone are the days of sending out check after check to pay your small business’s bills. Instead, take care of your payables with an automated or digital solution. There are many software as a service (SaaS) options that allow your customers to pay using digital checks, card, or on-site. Some popular choices for small businesses are QuickBooks, NetSuite, and Xero.   

2. Automated Reporting

Many of the same software solutions that help you make payments can also create financial reports. So you’ll have a lot less math to do on your end, which saves you time while also keeping you informed. You can find important information about your operations, like your business’s cash position or complete forecasting automatically. 

3. Mobile Deposit

As a small business owner, you don’t always have time to run to the bank to cash checks from customers. But you need the money to invest in your business. To help with these issues, look for a bank with an easy-to-use way to deposit checks on a mobile app so you can get quick access to your cash and track your deposits. Check out reviews of the app before you choose a bank to make sure it will work for you.

4. Merchant Services

Merchant services allow you to get paid by customers using credit and debit cards. Working with a merchant services provider may simplify the process and make it easier for you to manage your business’s payments. However, payment fraud is something you’ll want to be aware of. Consider working with a merchant services provider that offers fraud protection and fraud prevention services at no cost to you. 

5. Lockbox Services

If your small business deals with a lot of payments that are mailed in, you can sign up for a lockbox service, usually through your bank. With this service, your bank receives the payments and manages them for you, which may reduce your administrative costs. These services can give you faster access to cash, but you will have to pay a monthly fee.

What Is an Example of Cash Management?

There are five principles of cash management that can help your business succeed:

  • Collect receivables quickly. Send out invoices right away and consider offering your customers discounts for early payment. Allowing electronic or automated clearing house (ACH) payments can speed up the turnaround time.
  • Keep less inventory. Having a smaller inventory in stock may reduce the amount you spend and reduce your storage burden, which can help cash flow.
  • Pay bills close to the due date. Instead of paying a liability immediately upon receiving the invoice, wait until the due date nears so you can hold onto that extra cash for longer. Just try not to let the due date pass since that can hurt your credit.
  • Time out major purchases. Buying big items while you have additional cash on hand, like during the off season, may be a good idea to help spread out your expenses.
  • Invest extra cash. Make sure you’re investing your cash balances rather than letting them sit around, even if it’s a short-term investment. That way, you’re earning a return on your business’s idle cash, so it’s working for you at all times.

All of these principles offer great examples of practical ways you can better manage your business’s cash flow and working capital. Corporate cash management is also called treasury management and is usually handled by a corporate treasurer, chief financial officer, or other related employee. 

Other companies and small businesses turn to a combination of financial services, payment solutions, or cash management systems to handle this aspect of business operations. These choices often allow for automation and connectivity from anywhere, as well as functionality that eases the burden of managing a business’s cash all on your own. 

Physical Cash Management Solutions

Cash can also require far more labor intensive procedures when compared to managing electronic payments, such as having to spend time counting, sorting, depositing, reconciling, verifying, and preparing the cash. You’ll have to make bank runs, store the cash securely, pay higher insurance premiums to cover the risk of having a lot of cash on hand, secure for internal theft, all of which add to operational inefficiencies and costs.

When business owners get fed up with these inefficiencies, they can turn to cash management solution providers to transfer the labor and liability-related costs off of their organization and onto the cash management experts. There are four main cash management solutions, most of which are offered in bundled packages and sold to cash intensive businesses as a service package.

1. Armored truck service (note pickup and delivery)

In the United States, the major armored carrier players include Brinks, Loomis, Dunbar, Garda, and G4S. This service is where the armored carrier will deploy an armored truck to the merchant’s location to physically pick up notes and then transport the contents back to a money processing center of the armored carrier.

At said processing center, the carrier will process the contents on behalf of the bank (using a dedicated vault). In addition to doing a pickup, the armored carrier can also drop off notes to the location for the merchant’s change fund operations, or to fill up the merchant’s ATM machines.

2. Smart Safes

A Smart Safe is an advanced operational safe that automatically counts, verifies, records, and deposits the dropped cash amounts to the merchant’s bank account the next business day, via a procedure known as “daily bank credit.” This advanced operational safe can detect counterfeit notes, and print off customized reports not just from the Smart Safe’s menu board, but also through an online reporting portal that a merchant can log into and view all cash sales, credits, and other reports in real-time. Major Smart Safe manufacturers include Tidel Engineering, Fire King Security Group, and Armor Safe Technologies.

3. Note dispensers

Note dispensers are typically utilized by higher volume locations that might need to dispense notes for various operational purposes. Using the note dispenser can also allow for higher levels of security, as excess notes and coins can be stored securely in the dispensers, rather than being stored in other areas of the business. Tidel Engineering is a major note dispenser provider.

4. Cash recyclers

Cash recyclers are also typically utilized by higher volume locations, especially those with multiple checkout lanes (such as a large supermarket). This technology helps to streamline many back office operations such as end of day balancing, bank deposit prep, till prep, and more. Major cash recycler providers include Tidel Engineering and Glory.

The bundled package

To bring it all together, armored carriers will usually partner with financial institutions and cash management technology manufacturers to provide a bundled cash management service package to cash-intensive businesses. Also included in this service package is a maintenance policy that’s purchased on the side by the armored carrier, which provides peace of mind when it comes to maintenance requests on the technologies. The bundled package typically includes:

  • A cash management technology, based on the merchant’s needs, a customized Smart Safe package is designed, along with any value added technologies that might be required for the location including dispensers, cash recyclers, etc.
  • Daily credit deposits via the financial institution
  • Online reporting technology
  • Technology maintenance policy
  • The armored carrier will guarantee the physical contents within the technologies as well as service the technology deliver change fund orders

Turn to Nav to Increase Cash Flow

If you need to increase your access to cash as well as manage it better, Nav can help. Our small business loans and business credit cards marketplaces give you the best options for financing your small business. Open a free Nav account and enter your business details to see your options instantly.

This article was originally written on October 4, 2017 and updated on February 8, 2023.

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