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What to Do With Idle Cash: How to Maximize It & More

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No matter what stage of growth your business is in, you’re always on the lookout for new ways to generate revenue and reduce costs. One way to accomplish both goals is to optimize the use of idle cash. Idle cash is defined as excess cash that is not being used for current operations or for its primary purpose. For example, idle cash could be funds that are sitting in a checking account or investments that aren’t generating income.

Idle cash may not seem like that much of a problem. After all, haven’t we all heard how good it is to have “money in the bank?” But contrary to that old adage, unused excess cash can have a negative impact on your finances. 

First, idle cash is unprofitable because it’s not producing revenue or being used in such a way that it contributes to the growth of your business. Second, it can actually cost you money in the form of lost opportunities and fees. And third, as long as it remains unused, idle cash will continually lose its value due to inflation. Keep in mind, all these drawbacks also apply to cash equivalents like bank accounts that don’t provide any interest.

So what is there to do with idle, excess cash? There are in fact several ways businesses can take action and make their cash productive. The purchase of a fixed asset can boost production. You can use funds to prepay suppliers and possibly earn discounts or other financial perks. Another option might be to pay down debt which can lead to reduced interest costs and improved credit. Or idle cash can be used for Mergers and Acquisitions (M&A).

In this blog, you’ll learn why you probably have more idle cash than you think you have and be introduced to a tech tool you can start using right now to unlock all that hidden cash. Using this one tool is an effective and efficient way to help you track your excess cash–so it can be put to use instead of sitting idly by.

Where Is Your Idle Cash Hiding?

The real challenge with idle cash is not so much what to do with it, but it’s where to find all of it. It’s a little like a game of hide and seek. Because many businesses have disparate cash and investment accounts, each with their own set of policies that must be followed, it can be difficult to keep track of all your excess cash.

When there are multiple entities controlling multiple accounts, figuring out where the idle cash is located is a complex and complicated manual process. This lack of visibility is compounded by the fact that once the data is finally gathered and analyzed, it’s no longer actual or current. In order to make the best decisions, businesses need to know in real time what cash is available and investible. 

How Technology Unlocks Hidden Cash

No one will argue with the wise practice of setting aside an amount of cash for emergencies or unexpected operating expenses. That’s not the type of cash we’re talking about. But having funds saved for a rainy day shouldn’t be used as an excuse for letting excess cash go unused. The answer then is to manage the idle cash better by finding a way for it to appreciate in value even while it remains unused.

Fortunately, there are now new technologies that can help you maximize your idle cash and make it start working for you–not against you. Organizations across a broad range of industries are turning to AI-enabled software to help them make the most of their idle cash in a number of ways, including:

  • Automating the invoicing process
  • Managing vendor payments
  • Accelerating customer payments
  • Streamlining AP and AR processes
  • Predicting payments
  • Identifying high-risk accounts
  • Improving cash forecasting
  • Improving cash management

The benefits of accounts receivable automation software are far reaching. By replacing the tedious manual processes of creating and sending invoices and reconciling accounts, you save time and money as well as reduce the number of errors that inevitably occur when humans are responsible for data entry. 

As a result of automating your invoicing process, your cash flow will increase because invoices that go out faster get paid sooner. Offering your customers different (and more efficient) payment methods improves their experience. And with your finance team freed from all those repetitive, unchallenging tasks, they can focus on projects that contribute to growth and add more value to the business. 

Just those benefits alone would be reason enough to transform your finance department by adding this kind of technology. But when the AR automation software platform also leverages machine learning (ML) and artificial intelligence (AI), it’s revolutionary. You’ll be able to manage your cash better and produce cash forecasts that are substantially more accurate.

Artificial Intelligence Takes AR to the Next Level

The first step in maximizing idle cash is simply to reduce it. Cash forecasting using AI-enabled AR automation software helps reduce the overall amount of idle cash. Using historical data, the software has the ability to learn over time and can predict with high levels of accuracy how much cash you need to meet upcoming demands. That way you don’t have to set aside more cash than will be needed to cover expenses. Any excess will become idle cash because it ultimately wasn’t needed. 

Another area AI-powered software can help with is in identifying those high risk accounts that threaten a healthy cash flow. You can reduce the cash you normally hold back in reserves as well as write-offs. 

But that’s not all the right software solution can help with. You can forecast not only for demand projections but also predict incoming revenue more accurately as well. Knowing what cash will be coming into the business and when means you can make better investment and funding decisions.

Your cash management and forecasting is streamlined because the AR automation software keeps all your financial data stored in one place–the cloud for immediate access to real-time cash positions.

Maximize Idle Cash with Payference

If you want to know what to do with idle cash, Payference is an all-in-one tool that keeps all your cash management all in one place.  The platform works especially well for mid-market businesses that want all the benefits of AI-powered technology–benefits that, up until recently, have only been available to enterprise-level businesses.

Our customers appreciate the following Payference features:

  • Automated billing and invoicing
  • Customer statements
  • Multiple payment methods
  • Automatic reconciliations
  • Aging tracking
  • Customer self-serve portal
  • Overpayment processing
  • Payment collection
  • Partial payments
  • Receivables ledger
  • Multi-currency capabilities
  • Deduction and dispute management
  • Customer support by chat, phone and email/help desk
  • Subscription-based pricing

And Payference integrates seamlessly with your ERP and accounting systems, banks and payment channels in a matter of hours. 

It’s difficult to put excess cash to work if you don’t have insight into how much you have or where it is. If you’d like to find out more about how AR automation can positively impact your business and how to maximize your idle cash, reach out to our team today for a demo. We’d love to show you why Payference has become the preference of forward-thinking finance teams!