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_Best practices for implementing a B2B cash management system

No matter your enterprise’s nature, any business’s ultimate aim is to secure its payments. A cash flow management system helps improve cash management and payment processing. Implementing the best practices for a B2B cash management system requires integrating more solutions. Because of the current macroeconomic conditions and tight credit, businesses need integrated solutions. Most businesses are enhancing their B2B cash flow management to enable them to standardise payment processing. Several organisations, such as KredX, offer cash flow management solutions. KredX’s solutions include KredX Pay, accounts payable management, and accounts receivable management. Therefore, businesses need an integrated payment system to streamline cash management.

What is a B2B Cash Management System?

A B2B cash management system is an automated solution that helps businesses process payments. A B2B payment is similar to a customer’s payment, except that it is between two businesses instead of customers.

B2B cash management solutions can sometimes accept paper cheques. However, the trend is shifting to digital payment solutions. Automation of the process streamlines accounting services and book-keeping aspects like invoicing. Additionally, automation of the cash management process can enhance B2B e-commerce transactions for funds distribution.

Why Automate B2B Cash Management Solutions?

Cost reduction and efficiency: Automation shortens the process of issuing and verifying payments. This is because an automated B2B payment system such as KredX’s Cash Management Solutions records and verifies transactions quickly. Additionally, automation can cut costs associated with paper invoices. 

Improves productivity: With the best cash management software, the amount of time workers spend preparing invoices is reduced. In addition, since automation lessens workload, employees can accomplish more, leading to more efficient operations.

Enhanced reporting: Automation improves reporting because B2B cash management services are integrated.   Any team member can access the dashboard at any time, which enables immediate review and amendment of the information. Since errors are easily identified and corrected, automation enhances reporting.

Best Practices for B2B Cash Management System

The success of B2B cash flow management systems requires various aspects. Here are some of the practices to ensure your payment system succeeds.

1. Multi-bank Connectivity

One aspect to consider in a cash flow management system is linked to different banks. Most businesses tend to have relations with multiple banks. Therefore, reaching these different systems at once can be challenging because of varying protocols. A disconnect between the business’s systems and banking partners can result in an insecure and inefficient cash management process. This opens the door for possible error and fraud. Therefore, the best practice is to secure multi-bank connectivity with B2B cash management software.

2. Cash Flow Projection and Liquidity Management

Sometimes businesses may need more visibility to optimise working capital. This is because they track cash positions and payments separately. Consolidating transactional data, cash balance, and complex banking relations requires a B2B payment system. The system will offer instant visibility and enhanced accessibility. Therefore, it is vital to choose the best cash management software that provides visibility of all bank accounts. In addition, automation makes reporting cash balances easier from different accounts and ensures the accounts team gets accurate figures.

3. Efficient, Secure, and Rationalised Processes

The cash flow management system needs to be secure and efficient and all processes rationalised. Although businesses have internal controls to oversee staff, cash management systems are easily accessible. This may make room for unwanted habits like a single person managing all aspects of the cash management process. The best practice is to have an automated system to contact clients, generate reports, and collect information. Therefore, this increases efficiency and improves internal controls by eliminating the human element in some processes.

4. Proper Communication

When implementing a B2B cash flow management system, it is crucial to establish proper communication. Communicate the payment terms to clients clearly, including the fines or penalties for late payment. Also, it is important to indicate the acceptable duration for clients to pay, grace periods and circumstances when you can make exceptions. Having an interactive portal is crucial in cultivating transparency. The portal should allow clients to update and check accounts, make payments and check their payment history.

Challenges of B2B Cash Management Processes

Limited transaction tracking: With B2B cash management services tracking payments is limited. You will only know when the merchant has received the money. You have to wait for payment confirmation to be certain that the money went to the right account.

Payment delays: Sometimes, the B2B cash flow management system may experience technical issues. As a result, online transactions expected to be finalised instantly may take a while. Occasionally payment processors might hold payment for some days as they verify the transaction.

Final Thoughts

Implementing the best cash management software can improve efficiency and process and cut costs for a business. A good B2B cash management system ensures steady cash flow for the business’s working capital needs. However, when choosing a B2B cash management software, ensure it is secure and scalable and has standardised processes with central controls.

If you are searching for a B2B cash flow management system, consider KredX’s Cash Management Solution.

Devang Mundhra

Chief Technology and Product Officer

Devang is an innovator who has spent the past 17 years building technology that has empowered businesses around the world. The BITS-Pilani and Stanford University alumnus honed his skills at Lattice Engines (since acquired by Dun and Bradstreet) and Oracle before joining KredX in 2016. At KredX he has led the creation of fintech innovations like KredX Invoice Discounting platform and KredX Cash Management Solutions. You can reach him through LinkedIn.