Enhancing Cash Flow Management with NetSuite’s Financial Planning Tools

Enhancing Cash Flow Management with NetSuite’s Financial Planning Tools

Cash flow is the lifeblood of any business. Positive cash flow allows a company to meet its financial obligations, invest in growth, and build a stable foundation for the future. On the flip side, poor cash flow management can quickly lead to missed payments, strained vendor relationships, inability to capitalize on opportunities, and in the worst cases, business failure.

In today’s fast-paced and often unpredictable business environment, optimizing cash flow has become more critical than ever before. Companies need real-time visibility into their financial position, robust tools for planning and analysis, and streamlined processes to keep cash flowing smoothly. 

This is where NetSuite, the leading cloud ERP solution, shines. With a comprehensive suite of financial management tools, NetSuite empowers businesses to take control of their cash flow and make informed, data-driven decisions. Let’s explore how you can leverage NetSuite to enhance your cash flow management and set your business up for financial success.

Gain Real-Time Visibility with NetSuite Dashboards

The first step in effective cash flow management is having a clear, up-to-date picture of your company’s financial health. NetSuite provides configurable role-based dashboards that give you instant insight into key cash flow metrics.

With just a few clicks, you can view real-time cash balances, accounts receivable and payable aging, revenue forecasts, expense budgets, and more. Drill down capabilities allow you to quickly investigate variances and identify potential issues before they impact your cash position. 

For example, you might notice that a large invoice is nearing its due date. Through the dashboard, you can check the customer’s payment history, review allocated collections resources, and take proactive steps to ensure timely payment. Or, you may spot a spike in recent expenses and determine adjustments are needed to stay within budget.

By monitoring your cash flow daily through NetSuite dashboards, you can make agile, informed decisions to keep your business financially healthy. No more flying blind or relying on outdated reports – with NetSuite, you always have your finger on the pulse of your company’s cash flow.

Real-World Example:

ABC Manufacturing uses NetSuite dashboards to monitor cash balances across their global subsidiaries. Each morning, the controller reviews consolidated cash positions to determine liquidity for the day ahead. Recently, she noticed a dip in the Euro cash balance and investigated to find a delayed customer payment. By identifying the issue early, she was able to work with the collections team to secure payment before a cash flow gap occurred. Thanks to real-time cash visibility through NetSuite dashboards, ABC Manufacturing can proactively manage global cash and reduce risk.

Streamline Billing and Collections 

Slow-moving accounts receivable can be a huge drain on cash flow. The longer it takes customers to pay, the less working capital you have available. NetSuite offers a range of tools to help you streamline your billing and collections processes and get paid faster.

With NetSuite’s unified billing system, you can automate invoicing according to customer-specific billing schedules and payment terms. Invoices can be automatically emailed to customers upon generation, eliminating mail delay. Customers can even pay online through NetSuite’s SuiteCommerce portal, making the process fast and seamless.

On the collections side, NetSuite allows you to set up customized dunning rules and automatically send payment reminders to customers. Aging reports and collection metrics help you prioritize accounts and allocate follow-up accordingly. You can log every customer interaction and promise-to-pay within NetSuite, providing a complete history to inform collection efforts.

By billing promptly, accepting online payments, and proactively managing collections, you’ll bring money in the door faster and keep cash flow moving. What’s more, freeing up your staff from manual billing and collections tasks allows them to focus on higher-value activities to support the business. 

Tips for Streamlining Billing and Collections:

– Set up automated invoice delivery to get bills out the door faster

– Offer incentives like early payment discounts to encourage customers to pay promptly  

– Use collection automation rules to trigger reminders and eliminate missed follow-ups

– Analyze billing and payment trends to identify chronic late payers and adjust terms

– Track collection effectiveness metrics to optimize staffing and improve performance over time

With NetSuite’s billing and collections tools, you can tighten up the order-to-cash cycle, reducing DSO and accelerating cash inflows. Faster collections means more cash on hand to fund operations and investments.

Optimize Expense Management

Just as accelerating cash inflows improves overall cash flow, tightening up cash outflows can be equally impactful. NetSuite helps businesses optimize expense management to ensure that cash going out the door is being utilized effectively.

With NetSuite’s procure-to-pay workflow, you can establish approval hierarchies so that spending aligns with budget and policy. Purchase orders are automatically routed for approval and checked against allocated budgets before being issued. Three-way matching between POs, item receipts, and vendor bills provides an added layer of spend control.

NetSuite also streamlines employee expense reporting. Employees can snap photos of receipts on-the-go and submit expense reports from any device for manager approval. Policy violations and exceptions are automatically flagged, and approved reports flow seamlessly to accounts payable.  

By putting guardrails around both departmental and employee spending, you can reduce maverick spending and budget overages that eat into cash reserves. You gain tighter control over when and how cash is deployed, allowing you to allocate working capital more strategically.

Expense Management Best Practices:

– Establish clear expense policies and approval hierarchies 

– Use budgets to allocate spending and trigger alerts when thresholds are exceeded

– Require receipts and documentation for every expense 

– Set up automatic PO-to-payment matching to identify invoice discrepancies

– Analyze expense trends and ratios to identify waste and optimize spending

– Provide visibility into expenses and budgets so managers can proactively control spending

With NetSuite as the system of record for all spending, you can instill a culture of financial discipline across the organization. Optimizing outflows allows you to stretch cash further and do more with the working capital you have.

Leverage Budgeting and Planning Tools

Effective cash flow management isn’t just about tracking the movement of money in the present – it’s also about planning for the future. NetSuite’s budgeting and planning tools allow you to model cash inflows and outflows to ensure adequate liquidity.

With NetSuite Planning and Budgeting, you can create driver-based plans incorporating vendor contracts, sales projections, headcount needs, capital investments, debt service, and more. Perform what-if analyses to assess the cash flow impact of various scenarios, from landing a big contract to facing supply chain delays.

Rolling cash forecasts allow you to project cash sources and uses into the future, so you can predict cash shortages before they happen. Variance analysis highlights where actual performance is deviating from plan, so you can course correct and reforecast accordingly.  

Sophisticated modeling of cash flow empowers you to be proactive rather than reactive. You can test the feasibility of new investments, compare financing options, and determine optimal cash reserve levels. Budgeting transforms from an annual Excel exercise to an ongoing strategic discipline that keeps cash flow at the forefront.

Guidelines for Cash Flow Budgeting and Planning:

– Involve cross-functional stakeholders to capture a complete picture of cash drivers

– Integrate budgets with cash forecasts to assess short- and long-term liquidity

– Use historical data to establish a cash flow baseline, then layer in growth assumptions 

– Incorporate “most likely”, “best case”, and “worst case” scenarios into models

– Monitor budget vs. actuals frequently and adjust models based on performance  

– Establish contingency plans for cash shortages, such as revolving credit lines

By budgeting and planning cash flow in NetSuite, you instill the discipline to look beyond the next paycheck or billing cycle. With robust models and scenarios, you can formulate an intelligent, forward-looking cash flow strategy that supports sustainable growth.

Monitor Supplier Terms and Liabilities

Managing cash outflows isn’t just about controlling discretionary spending – it’s also about strategically handling your accounts payable. NetSuite gives you the tools to optimize how and when you pay suppliers to support healthy cash flow.

Vendor management features in NetSuite let you track supplier payment terms, early payment discounts, and volume rebates. By paying strategically, you can take advantage of discount opportunities to generate extra cash savings. On the flip side, you may sometimes want to defer payment rather than pay early, to maximize working capital. 

NetSuite’s vendor center provides a snapshot of upcoming bills and payments so you can closely align outflows to your overall cash position. Built-in accounting and reporting ensures payments are booked accurately and provides a full audit trail of cash outflows.

By actively monitoring accounts payable and payment timing, you can create a cash outflow schedule that is in sync with your cash inflows and liquidity requirements. The result is reduced chance of cash flow gaps and surprises, and a more proactive grasp of your liabilities.

Tips for Managing Supplier Terms:

– Negotiate favorable terms where possible, focusing on pricing, payment due dates, and discounts

– Set up vendor terms, early payment discounts, and rebates in NetSuite vendor records

– Track vendor performance metrics like on-time delivery to identify partnership opportunities

– Create vendor payment schedules based on your cash position and working capital strategy

– Take advantage of virtual credit cards to pay suppliers while prolonging cash outlays

– Analyze spending by category and supplier to find consolidation opportunities 

With NetSuite as your payables command center, you gain a strategic lens into supplier relationships and liabilities. By aligning vendor payments to your overall cash flow picture, you can optimize working capital while maintaining positive supplier relations.

Automate Bank and Credit Card Reconciliation 

Timely, accurate insight into your true cash position is essential for sound cash flow management. The challenge is that with money constantly flowing in and out of multiple accounts, it can be tough to know exactly where you stand at any given moment. NetSuite solves this with automated bank and credit card reconciliation.

NetSuite tightly integrates with your financial institutions, importing bank and credit card transactions daily. Automated matching clears these transactions against reconciled NetSuite transactions, taking much of the legwork out of reconciliation. Any exceptions or discrepancies are flagged for review, dramatically reducing the risk of error.

With up-to-date, reliable cash balances, you always know exactly how much cash you have on hand. No more second-guessing whether you can make that vendor payment or fund that equipment purchase. Faster reconciliation also eliminates bottlenecks so you can close the books faster every month, producing financial statements that show where you stand.

Bank downloads and auto-reconciliation eliminate hours of manual transactional work for your finance team each month. More importantly, they keep you equipped with accurate, real-time cash insights to support agile decision making around liquidity and investments.

Best Practices for Bank Reconciliation:

– Connect all bank, credit card, and payment processor accounts to NetSuite

– Schedule automatic daily transaction imports and auto-matching

– Establish workflows to route reconciliation discrepancies for review and resolution

– Analyze reconciling items to pinpoint root causes like unrecorded expenses or revenue

– Run cash position reports in NetSuite immediately after completing reconciliations

– Cross-train accounting staff on reconciliation to reduce bottlenecks 

Accurate, timely visibility into cash balances is a building block of cash flow management. By automating all or part of reconciliation in NetSuite, you gain a real-time view of liquidity while eliminating tedious accounting workloads.

Analyze Cash Flow Data with NetSuite Analytics

Optimizing cash flow isn’t a one-and-done task. It requires continually asking questions of your data to surface insights and improvement opportunities. NetSuite Analytics delivers these capabilities through built-in cash flow dashboards and reporting. 

NetSuite’s Cash 360 dashboard provides a graphical view of your cash position, liabilities, cash projections, liquidity ratios, and other vital metrics. View cash trends over time to understand seasonal ebbs and flows, assess your cash conversion cycle, and compare your money management to industry benchmarks.

NetSuite’s SuiteAnalytics Workbook allows you to create customized cash flow reports without technical know-how. Drag-and-drop capabilities let you add or delete data points, calculate custom KPIs, and build reports that are meaningful to your industry and business model.  

With cash flow data at your fingertips, you can uncover the story behind the numbers. Perhaps a shortening cash conversion cycle is the result of offering early payment discounts to suppliers. Or maybe spikes in DSO warrant revisiting customer credit limits. Analytics empower you to identify root causes and opportunities.

Armed with cash flow insights, you can make continuous improvements to your policies and processes to optimize cash flow over time. From adjusting billing frequency to negotiating supplier terms to rightsizing inventory levels, NetSuite Analytics informs strategic cash flow management.

Key Cash Flow Metrics to Track:

– Cash balances and days of cash on hand

– Accounts receivable aging and days sales outstanding (DSO) 

– Accounts payable aging and days payable outstanding (DPO)

– Inventory balances and days inventory outstanding (DIO)

– Cash conversion cycle (DSO + DIO – DPO)

– Operating cash flow, free cash flow, and net burn rate

– Current ratio, quick ratio, and operating cash flow ratio

With NetSuite Analytics, you always have a pulse on the cash flow drivers that matter most to your business. By monitoring the right metrics and using data to drive decisions, you can effect sustainable cash flow improvements.

Build a Healthy Cash Culture

While the right tools are crucial, effective cash flow management is just as much about embedding a cash flow mindset across the organization. Every employee impacts cash flow in some way – whether it’s hitting sales targets, securing prompt payment, controlling expenses, or making purchases. A company-wide focus on cash flow is essential. 

NetSuite reinforces this through role-based views of relevant KPIs. Sales can monitor days sales outstanding and cash collections, finance can track burn rate and run rate, and executives can watch free cash flow and liquidity ratios. With the whole team tracking the right numbers, cash flow becomes a unifying priority.

Real-time dashboards also make it easy for leaders to continuously tie day-to-day actions back to cash flow. Employees start to understand how their work connects to cash – how reducing COGS frees up working capital or how negotiating favorable payment terms keeps cash longer. A cash culture becomes woven into the fabric of the business.

With NetSuite underpinning your operations, cash flow management transforms from a reactive accounting activity to a proactive, strategic discipline that involves every team member. The tools, data, and mindset all come together to hardwire healthy cash habits into your business.

Tips for Building a Cash Flow Culture:

– Educate employees on how their roles impact cash flow 

– Share cash flow performance and targets in company meetings

– Recognize and reward teams that excel in cash-related KPIs 

– Involve cross-functional leaders in cash flow planning and reviews

– Make cash flow a focus in new hire onboarding and regular training

– Instill shared accountability for company-wide cash flow goals

A strong cash culture amplifies the impact of NetSuite’s cash flow management capabilities. When every employee understands their role as a steward of cash, the whole company is equipped to protect cash flow and achieve financial health.

Conclusion

In today’s business world, effective cash flow management is no longer optional – it’s an absolute necessity. Companies that optimize cash inflows and outflows are better equipped to fund growth, weather downturns, and make strategic investments. With the right approach, cash flow management becomes a competitive advantage.

NetSuite’s financial planning tools empower businesses to take their cash flow management to the next level. Through automation, real-time visibility, robust planning, and intelligent insights, NetSuite helps organizations proactively optimize their cash position and make informed, strategic financial decisions.

Whether you’re looking to get paid faster, control spending, improve budgeting, or simply maintain a steadier cash flow position, NetSuite can help. With NetSuite’s world-class tools and your commitment to cash flow excellence, you can build a business that is resilient, agile, and primed for growth.  

No matter your industry or growth stage, it’s time to place cash flow management at the forefront. Leverage NetSuite’s financial solutions to strengthen your cash position, and build a business that can thrive in any environment. Your future financial health depends on the cash flow management steps you take today.