5 financial management toolsets to strengthen your business


Which are in your toolkit—and which are on your radar?

How you approach financial management has a direct impact on your company’s bottom line. It determines how you’ll build value and defines your image in the eyes of investors, partners, lenders, appraisers, and purchasers.

Being equipped with sound financial management tools is one of the best ways to ensure those external partners like what they see. Knowing how to leverage those same tools to optimize your resources and demonstrate a value-creating edge? That’s an approach that will not only leave you with a better business, but make those same partners take an even closer look.

What are the benefits of financial management tools?

Recent advances have enabled companies to leverage groundbreaking digital tools and financial management techniques to smooth out operations and build stronger businesses. Specifically, they allow organizations to focus more on their core mission and less on internal processes by:

  • Reducing time spent on operational maintenance
  • Helping manage business scalability
  • Limiting manual errors for data input and coordination
  • Organizing finances

Five classes of financial management tools are most responsible for driving these improvements. Knowing what they are—and how they work—is the key to strengthening your business.

Recent advances have enabled companies to leverage groundbreaking digital tools and financial management techniques to smooth out operations and build stronger businesses.

Building your financial management toolkit

Here are five important sets of tools that will help you strengthen your financial position.

Toolset #1: Reporting and analytics

There’s been an explosion of data spanning markets, customers, operations, and financial transactions. Financial sophistication comes from turning that data into snapshots and reports, highlighting the business implications, and communicating them broadly.

Reporting and analytics tools are the source of those all-important data captures, and they allow you to monitor and distill your data into financial key performance indicators (KPIs). There are many types of reporting and analytics tools to choose from. Here’s a handful that should be first on your list to check out or shore up:

Automated reporting and business intelligence systems assemble information from different systems into a real-time view. Often using enterprise resource planning (ERP) systems as a backbone, these systems consolidate financial accounting (general ledger, payables, receivables, budgeting), human resources (payroll, recruiting, 401K), manufacturing (inventory, workflow management, cost control), and customer relationship management (CRM) data. Business intelligence features, like dashboards that graphically display specific KPIs, can furnish data on the fly. That means less time on day-to-day reporting and more time evaluating opportunities.

Enterprise resource planning (ERP) systems enable you to manage key components of your finances and operations—permitting you to automate once cumbersome processes like accounts payable, which can then be efficiently integrated into your reporting and intelligence solutions. They are the digital backbone of your reporting and analytics operation. To ensure yours is as sturdy as possible, look to high ranked producers of ERPs.

Commercial Online Banking gives your business a hand with reporting and analysis of daily financial transactions. Capabilities range from simple online banking to full-featured treasury management systems.

Continuous budgeting supports decisions based on real data and current market conditions. Paired with the right business intelligence and ERP systems, they can help boost your forecasts from the annual to the quarterly or monthly.

Break-even analysis finds the level of sales your company needs to fulfill obligations and sustain operations. More advanced break-even analyses allow you to model different conditions like raw materials cost, labor costs, economic conditions, and business strategies.

Audited statements provide an objective third-party assessment of financial statements for added confidence.

Inventory management systems help keep your inventory levels in check, reduce carrying costs, and pinpoint obsolete items.

External industry analysis helps you understand the future of the industry, emerging competitive issues, and benchmarks.

Toolset #2: Cash management

Visibility into cash flow, control over its movement, and predictability over its levels are an integral part of strengthening your business. Here are the cutting-edge financial management tools topping the list:

Zero-balance accounts, which automatically pool funds into a single account each day, reduce idle cash and allow for easy transfer into overnight investment vehicles or loan paydowns. A controlled disbursement system provides early, same-day reporting of all checks presented for payment to determine cash needs for that day.

An active partnership between the chief financial officer and chief risk officer creates an integrated approach to risk management. A close partnership between their teams can help steer the business to achieve better risk-adjusted returns that align with strategic goals.

Advanced cash planning positions your company for the best cash use. Forecasting cash needs allows you to secure the right forms of capital, take advantage of term investments, or leverage opportunistic inventory buys.

Toolset #3: Accelerated receivables

High-functioning collections and receivables operations form the circulatory system of your cash flow process. Reducing your “days sales outstanding” figures can improve cash flow and reduce the amount of working capital needed.

Automated account receivables through a CRM or ERP system (discussed earlier) attaches all information to invoicing, including purchase order numbers.

Enforced payment policies assess interest and late-payment penalties consistently. Educate your sales force on supporting consistent payment policies with customers. 

Banking payment platforms, such as Automated Clearing House (ACH) debiting, speed up collections. Merchant services expand your payment types, making it simpler for your customers to buy. Wholesale lockbox tools provide fast processing of mailed payments and access to funds.

Accelerated invoicing starts the payment process earlier. Get the invoice out faster with point of service payment and invoicing, emailed/messaged invoices, sales contract-triggered invoices, and online bill presentment.

Outsourced billing services can reduce operating expenses and deliver higher collections rates and better cash flow.

Toolset #4: Controlled payables

Accounts payable (AP) can use the latest tools to gain control over cash outflows—and trigger when invoices are paid and how.

Payment services provide efficiency and streamline processes. ACH payments are inexpensive to process and give you control over payment timing. Integrated payment processing systems combine payments into a single payment stream and send them to vendors using the best route.

Days payable outstanding (DPO) can be improved by making sure that your purchasing professionals negotiate with vendors and set payables terms. Finance and purchasing should work closely to benefit from the terms extended by your vendors.

Automated payables lower invoice-processing costs and posting-cycle times. A paperless processing environment takes advantage of automation for invoice scanning, automatic purchase-order generation, and electronic invoicing, payment, and approvals.

Purchasing cards and virtual cards can get your vendors paid faster while extending favorable payment terms for you. As an electronic payment form, purchasing cards boost accuracy while reducing costs from errors and late payments.

Toolset #5: Expense management

Expense management is as much a necessity for expanding or established businesses as it is for those watching every penny. Increased efficiencies and lower expenses come through the continuous search for cost cuts and improvements.

Corporate card and integrated spending platforms work together to control, combine, and streamline company-wide expenses while uncovering savings opportunities.

A spend optimization culture keeps everyone in the enterprise focused on cost efficiency and accountability. Elevate the procurement department to a top position in the company structure. Also consider consolidating sourcing efforts and aggregating spending across business lines for greater purchasing leverage with vendors.

Strategic outsourcing lets your business stick to what it does best and outsource non-core functions. Advances in cloud technology and software-as-a-service (SaaS) vendor systems provide solutions to small and middle market companies looking to outsource HR, PR, legal, and payroll functions.

Procurement outsourcing consolidates procurement processes by category (IT, HR, marketing, etc.), by project, or by vendor for scale economies in buying and lower staff costs.

Vendor management targets negotiation of better volume-based pricing and longer payment terms with important vendors.

Improved employee financial literacy lifts the business to a higher level of fiscal consciousness. Sharing financial information, processes, and policies across the company provides more buy-in for all staff toward meeting the company’s goals.

Step up your game with advanced financial-management tools.

Ready to put some time-tested and high-tech tools to work for you? Talk to your Truist relationship manager today.