This topic refers to managing volume of cash collections and disbursements in an organization.  Most of our clients at Hilsoft encounter this type of problem especially those SMEs where the owners are the ones doing the tedious job of analyzing and forecasting cash position.

Efficiently managing cash is very critical in any organization.  A big mistake in cash management will result in insolvency or worse, bankruptcy.

The most common problem in cash scheduling is the ability to capture collection in volume on time.  In a manual process, typically there is a cashier who receives payment and encodes it in a POS or an excel sheet.  If a particular check requires an application to close a receivable, that’s another problem in itself.

On the payable side, the payable clerk prepares a summary of payables due and forwards it to the treasury for disbursement schedule.  The owner or the treasury manager now manually plot the collection vs. the payables and come up with scenarios that ensure they won’t encounter cash deficit or bounced check.  And the cycle goes on and on.

So what is the problem here?  As an owner who manages cash, it is very time-consuming and error-prone to re-encode collection and disbursement and plot it in an excel sheet.  That tedious job results in frustration and burnout.  Don’t fret.

Here’s how you can automate this process:

1. Most accounting systems have the capability to capture collections.  Just choose the customer who remitted the payment, then apply the invoice they are paying, then the software will automate the collection register for you.

2. Schedule your recurring collection and payments.  Examples are post-dated checks, rent expense, insurance, or loans.  Choose if it recurs monthly, quarterly or yearly.  With this, the software can already forecast the cash inflow and cash outflow for you automatically.

3. Utilize the payment terms feature in the software when recording sales invoices and accounts payables and set due dates in your transactions.  Those transactions with due dates will also be part of the cash forecast that the software automates.

4. Choose an accounting software that can generate a worksheet to visualize the forecast.   It will also be beneficial if it has a feature to edit payment schedules within the sheet and create different scenarios.

You can solve a lot of transaction processing, and reporting problems with software automation.  It is now up to you to evaluate the right software product and vendor.  I cannot wait for you to take action.

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