How is the Digital Wave Disrupting Cash Management


What is Cash Management?

Cash management is the process of collecting, managing and distributing cash flows within an organization or amongst various businesses. Companies have multiple sources of cash inflows and outflows.

It can be from a business’s operational activities like financing and investing. These cash flows must be cautiously managed in order to maintain adequate financial stability. It helps businesses meet payment obligations and plan future payments.

Typically, banks are the most trusted providers of financial services for cash management. However, companies may work out their cash management responsibilities with the help of various software. Such cash management solutions can assist individuals and businesses in seeking the best returns on cash assets, investing and managing daily cash flows.

Technology’s Impact on Cash Management

Till now, cash management used to be a strenuous process. It required physical transportation of cash and cheques to get money deposited or withdrawn.

Chief financial officers, business managers and corporate treasurers had to make key calculations and analysis to propose new strategies for management. But with growing technology and digitization, banks and corporates are making way for digital cash management.

Many progressive banks and financial institutions have already joined in the digital wave. They are offering mobile and web-based services to their customers for performing on the go transactions and other operations.

This means financial institutions have to upgrade their cash management systems to digital systems with the latest technology for surviving the competition.

Businesses are looking for financial services providers offering comprehensive cash management solutions for their enterprises. This has opened up new doors of opportunity for banks and businesses to choose from a wide variety of digital cash management systems available in the market.

Features of Digital Cash Management Solutions

Now that financial service providers are shifting to self-service models, they are heavily investing in cash management software.

A software that is easy to use and secure, which can contribute in addressing their cash management challenges. Technical providers are developing enterprise-wide solutions with cutting-edge technologies to serve their customers.

Digital cash management solutions enable the integration of all the digital receivables and payables with core banking channels. This digital system helps the service provider to interact with different business systems.

Businesses can execute collections through automated workflow. It provides real-time access to balance and transactions. Additionally, digital cash management systems offer features for analytical observations such as data visualization and insights. Such digital solutions may also offer:

  • Cash concentration
  • Ad-hoc reporting abilities
  • Cheque and deposit imaging
  • Extended data retention

Importance of Digital Cash Management

How is the Digital Wave Disrupting Cash Management

High volume of transactions and profitability are two major aspects driving the digital cash management systems. But it accounts for many more advantages that are as follows:

1. Ensures Liquidity

According to research, one thing that many businesses lack is liquidity in spite of high gross income. To avoid a liquidity crisis, businesses should ensure that they don’t run out of liquid cash.

Using a digital cash management system, you can access real-time balance, income, expenses and all other vital data. So, this gives clarity of the current cash position of a business.

2. Aids Financial Planning

Digital solutions give an accurate picture of the working capital and cash flows in a business.

This helps the finance department to assign funds to routine business activities and future investments.

This way businesses can mobilize funds depending on sources of short-term and long-term cash inflows.

3. Monitoring Subsidiaries

Centralized standard operating procedures (SOPs) help in standardizing the processes even for subsidiaries. This enables the monitoring of local cash inflows and outflows. Thus, headquarters can provide direct feedback to the local entities.

4. Reduces Risk of Frauds

When there is a cash transaction, there is a risk of fraud. But digital cash management holds a real-time record of all the transactions.

Cash management software incorporates various parameters that can be set in advance to point out discrepancies. It has the capability to detect and flag any fraudulent activities. So, it becomes easy to trace the source of fraudulent activity even if it happens.

5. Meets Customer Expectations

Today’s tech-savvy generation expects digital solutions for all their financial services, except for the ones impossible. With the rapid growth in smartphone users, customers now want services on the tip of their fingers.

Digital cash management makes it easy to provide. It also enables providers to respond to customer’s queries, adding to customer satisfaction.

6. Cost-effective

The digital cash management solutions reduce the cost of cash management. Cloud-based banking, automated processes and paperless transactions reduce the number of people required in a business for cash-related operations.

Robust cash management strategies using digital solutions may also lead to reduced interest rates on borrowing and better investment choices.

7. Improves Employee Efficiency

Once these redundant routine tasks are automated, the employees can work on the more challenging activities. The employees can become an adviser to assist their customers rather than doing mundane tasks like bookkeeping.


With the increasing demand for digital services, it is inevitable to use the latest technology in cash management operations. Digital cash management can efficiently manage the collection, distribution and organization of cash resources.

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Author: Ryan North