How to Optimize Cash Flow Using NetSuite’s Advanced Financial Tools

Cash is the lifeblood of any business. Maintaining a healthy, positive cash flow is critical for funding operations, investing in growth, and ultimately ensuring the long-term success and viability of your company. But effectively managing cash flow can be a complex challenge, especially for growing businesses. You need to have real-time visibility into your finances, the ability to accurately forecast cash inflows and outflows, and tools to help you make data-driven decisions to optimize working capital.

This is where NetSuite’s advanced financial tools and cash flow management capabilities can be a game-changer. As a unified cloud ERP platform, NetSuite provides end-to-end visibility into your financials and automates key processes to help you closely monitor and manage cash flow. Its robust reporting, analytics and forecasting features allow you to track cash flow trends, model what-if scenarios, and proactively make adjustments to improve liquidity.

In this post, we’ll take an in-depth look at how NetSuite can help you optimize cash flow management and achieve your financial goals. Whether you’re a controller, CFO, accountant or business owner, these strategies and NetSuite features can give you the insights and control needed to make the most of your cash. 

Gain Real-Time Cash Flow Visibility with NetSuite Dashboards

The first step to optimizing cash flow is having an accurate, up-to-date understanding of your cash position and liquidity at all times. NetSuite makes this easy with its customizable financial dashboards. With just a few clicks, you can see a real-time snapshot of key cash flow metrics like:

• Cash balance and days cash on hand 
• Accounts receivable and days sales outstanding 
• Accounts payable and days payable outstanding
• Operating cash flow, free cash flow and cash conversion cycle
• Cash flow trends and projections
• Liquidity ratios like quick ratio and current ratio

Having this data in one centralized place allows you to quickly spot issues, drill down to investigate root causes, and take proactive measures to improve cash flow. For example, if you notice days sales outstanding ticking up, you can look into strategies to accelerate collections like sending invoice reminders, offering early payment discounts, or even outsourcing to a professional collections agency.

NetSuite’s cash management dashboards can be personalized for different roles and needs across your organization. Your AR and AP teams may want to see receivables and payables aging data to stay on top of invoice management. Executives often prefer high-level liquidity metrics and cash flow forecasts to inform strategic planning. Department managers need to see budget vs. actual reports to manage spending. With NetSuite, everyone has access to the timely, relevant cash flow insights they need.

Accelerate Cash Inflows with Automated Invoicing and Collections

Improving the speed and efficiency of your invoicing and collections processes is one of the most effective ways to boost cash flow. The faster you mail out invoices and the more diligent you are about following up, the quicker you’ll get paid. NetSuite helps on both fronts with advanced accounts receivable automation.

With NetSuite’s billing management tools, you can automatically generate and send invoices based on your pre-defined schedules and triggers – no more wasted time manually creating invoices. You have full control and flexibility over your invoice design, delivery methods (email, print, online portal), billing cycles, and payment terms and conditions.

Invoices can be automatically emailed to customers with an online payment link, enabling them to quickly pay via credit card or bank transfer. You can also offer customers a self-service portal where they can view and pay their outstanding invoices 24/7. These electronic payment options not only get you paid faster, but also reduce manual effort and errors compared to processing paper checks.

To streamline collections, NetSuite lets you set up automatic payment reminders to gently nudge customers when invoices are coming due or past due. You can create an entire series of follow-up emails at specified intervals, with messaging that gets firmer over time. This consistent communication keeps unpaid invoices top of mind and improves on-time payments.

For an extra collections boost, use NetSuite’s built-in customer risk assessment tools to proactively identify accounts that may need additional attention. With its predictive algorithms, NetSuite analyzes factors like past payment behavior, credit scores, and external economic data to highlight customers at risk of late payment or default. This early warning system allows you to take swift action, such as adjusting payment terms or putting a credit hold on future orders, to mitigate the risk.

By automating many of the repetitive administrative tasks associated with billing and collections, NetSuite frees up your finance team to focus on more strategic cash flow optimization activities. It arms them with the data and tools to be more proactive and effective at managing accounts receivable.

Maximize Early Payment Discounts with NetSuite’s Payables Tools

Just as you want your customers to pay on time to improve cash flow, you also have a financial incentive to pay some of your vendors early. Many suppliers offer prompt payment discounts – usually in the range of 1-2% off the invoice amount if you pay within a shortened timeframe like 10 days. While this may not sound like much, it can really add up across your accumulated spend, bolstering your bottom line. 

However, capitalizing on these early pay discounts is only worthwhile if you have the excess cash to do it. You need to strategically time your payments to maximize discounts while not putting the squeeze on working capital. NetSuite’s accounts payable features help you walk this fine line and make the most of vendor discount opportunities.

With NetSuite, you can easily configure your vendor records and payment terms to automatically flag invoices eligible for early payment discounts. When your AP team is selecting invoices to pay, they can filter and sort for discountable invoices and see the potential savings available for each. This streamlines discount capture and maximizes your returns.

Behind the scenes, NetSuite’s advanced accounts payable engine helps ensure that you’re paying the right amount to the right supplier at the right time. It automates the 3-way matching process of comparing invoices to purchase orders and receiving information to catch any discrepancies prior to payment. With automated approval workflows and the ability to schedule payments in advance, you have airtight control to avoid erroneous or duplicate vendor payments that eat into cash reserves.

Strengthen Financial Planning with NetSuite’s Cash Flow Forecasting Tools

Managing cash flow is both a short-term and long-term planning process. You need to have enough cash on hand to support daily operations and meet your obligations. But you also need to forecast future cash requirements to maintain adequate reserves and plan for investments. NetSuite’s built-in planning and budgeting tools help you create detailed, driver-based cash flow forecasts to guide decision-making.

Using NetSuite’s cash flow forecasting engine, you can project cash inflows and outflows across any timeframe – weekly, monthly, quarterly or yearly. It has the flexibility to create multiple cash flow scenarios and models based on different assumptions and drivers, such as:

• Sales pipeline and revenue forecasts
• Billing schedules and predicted customer payment timing 
• Anticipated vendor purchases and payment terms
• Payroll costs and timing
• Capital expenditures and financing cash flows
• Investment income and interest payments 
• Tax payments and filings

With real-time actuals dynamically pulled from NetSuite, you can continuously refine your forecasts to account for the latest business conditions. Rolling 13-week cash flow projections help you keep a pulse on short-term working capital needs. Longer range forecasts support strategic planning around financing, capital projects, acquisitions and more. 

NetSuite’s cash flow planning tools provide immense value in modeling specific scenarios and stress-testing your cash position. You can perform sensitivity analysis to gauge the potential cash flow impacts from a variety of variables like:

• Winning or losing major clients
• Price changes or discount levels
• Shifts in supplier costs
• Taking on new debt or capital investments 
• Changes in payment terms on either the receivables or payables side

These what-if analyses give you crucial insights into your cash flow risk factors and limitations, allowing you to proactively adjust plans as needed. Is your cash position strong enough to launch that new product line ahead of schedule? Can you afford to offer more generous credit terms to a big client? What happens to your cash reserves if that big deal falls through? With NetSuite’s scenario modeling capabilities, you can pressure test your cash flow to support smart, informed decisions.

Simplify Cash Flow Reporting for Maximum Insights

Timely, accurate cash flow reports are essential for monitoring liquidity, informing decisions, and communicating your cash position to stakeholders. But pulling together a cash flow statement from disconnected spreadsheets and systems can be a tedious, error-prone process. NetSuite streamlines and automates cash flow reporting so you can quickly generate statements directly from your real-time ERP data.

NetSuite’s built-in cash flow reporting tools allow you to:

• Produce up-to-date cash flow statements with the click of a button, including cash flows from operating, investing, and financing activities
• Drill down from summary cash flow reports to the individual transaction details 
• Compare actual cash flows to budgets and forecasts
• Perform detailed variance analysis to investigate cash flow drivers
• Create cash flow dashboards and visualizations
• Distribute cash flow reports to managers, executives, board members and other stakeholders

As a unified platform, NetSuite eliminates the headaches of stitching together data from multiple sources for cash flow reporting. All of your financial and operational data is centralized within NetSuite – from sales orders and invoices to purchase orders and payments – providing a single source of truth. You can have full confidence in the accuracy and completeness of your cash flow reports.

In addition to basic cash flow statements, NetSuite offers more advanced cash flow analytics to closely track and manage liquidity, including:

• Free cash flow reports to monitor cash generated from operations after accounting for capital expenditures 
• Cash performance reports comparing cash inflows and outflows to sales, showing changes in cash positions over time
• Cash conversion cycle reports to track the timeframe of tying up cash from initial cash outlay to investment recovery
• Cash forecasting reports showing projected future cash flows alongside actual results
• Cash flow ratios and KPIs to assess overall liquidity and cash management effectiveness

Armed with these incisive cash flow reports and analytics, you can keep a vigilant watch on working capital and quickly identify levers to pull to optimize liquidity. They provide an early warning system for short-term cash crunches and inform long-term strategies to improve cash flow over time. You can share them across the organization to drive alignment around cash flow goals and influence the right behaviors.

Automate Processes to Optimize Working Capital

Beyond reporting and analysis, truly optimizing cash flow requires changing day-to-day processes and behaviors throughout your organization. The goal is to bring more discipline and control to activities that drive cash inflows and outflows. NetSuite’s intelligent automation and workflows can help instill this cash flow culture.

Here are a few examples of how you can leverage NetSuite to automate processes for healthier cash flow:

• Set up automatic sales tax calculation and tax filing to ensure timely filings and avoid costly penalties
• Use approval workflows on purchase orders, vendor payments and expense reports to provide checks and balances on cash outlays
• Establish inventory reorder points and safety stock levels to optimize inventory investments
• Automate 3-way matching of invoices, purchase orders and receipt entries to prevent payment errors and fraud
• Automate intercompany accounting and reconciliations to save time and improve accuracy on internal transfers
• Set up cash-basis accounting rules to prompt recognition of revenue only when payment is received
• Enable consolidated cash reporting across multiple subsidiaries and entities for a comprehensive view of cash positions

These are just a handful of the many ways you can configure NetSuite’s flexible workflows to inject more rigor into cash management. By using NetSuite to automate policy compliance and controls, you free up your finance team to focus on cash flow analysis and optimization rather than patrolling for violations.

Strategically Manage Cash Holdings with NetSuite’s Banking Tools 

Even after implementing all of these cash flow best practices, you still need the right banking relationships and structures to effectively manage your cash. Excess cash reserves shouldn’t just sit idle in a checking account earning no return. Conversely, you need to maintain adequate operating cash to avoid expensive overdraft fees or working capital shortfalls. NetSuite’s banking and cash management features support strategic management of cash holdings.

NetSuite allows you to track balances across all of your bank accounts, in any number of currencies, right within your ERP. Automated bank feeds digitally import account transactions and balances, enabling you to perform one-click bank reconciliations. Unifying your banking and financial data within NetSuite saves hours of manual effort and provides a centralized, real-time view of global cash positions.

You can define sophisticated bank account transfer rules to automatically optimized your cash in each account. For example, you may configure your checking account to keep a minimum operating cash balance, with any excess swept over daily to an interest-bearing money market fund. Then when the checking balance falls below a floor threshold, you can trigger an automatic transfer back from the investment account to replenish it.

NetSuite also facilitates more complex cash management structures like cash pooling and intercompany loans to optimize working capital across entities. With a full audit trail of every cash transfer, you can precisely account for the movement of funds and keep your cash exactly where you need it.

Tapping Your Data for Effective Cash Management

Optimizing cash flow is an ongoing journey that requires laser-focus, a disciplined process, and incessant analysis of data to turn insights into action. Leveraging NetSuite’s built-in tools for cash flow forecasting, automation, and reporting provides a leg up on this journey.

But to truly achieve cash flow excellence, you also need to foster a cash flow culture. Every decision maker across the business should be thinking about how their actions and strategies impact cash flow. Establish KPIs and continuous improvement goals around cash flow metrics like days sales outstanding, working capital, and operating cash flow. Review cash positions and variances with functional leaders on a regular basis. Critically evaluate how shifts in pricing strategies, payment terms, procurement policies, and investment plans will play out from a cash flow perspective. 

With NetSuite’s end-to-end cash flow management capabilities, you have the tools and data to proactively manage liquidity, reduce cash flow risk, and support smart growth. Tap into these features to build a more cash flow-centric organization and secure your financial future.

The Cash Flow Imperative in Uncertain Times

Diligent cash flow management is always important, but it’s even more critical in times of economic uncertainty. Whether facing inflationary pressures, recession risks, supply chain disruptions, or pandemic-fueled volatility, you need maximum visibility and control over working capital.

NetSuite’s planning and forecasting capabilities become even more valuable for modeling cash flow what-if scenarios and stress-testing your liquidity in the face of potential shocks. With timely cash flow insights at your fingertips, you can quickly pivot spending strategies and reallocate resources as conditions change. Perhaps you temporarily draw down on reserves or credit lines to increase safety stock of critical components. Maybe you offer extended payment terms to struggling clients to maintain long-term relationships. You might dial back non-discretionary spending to preserve cash reserves.

Whatever challenges you face, getting a firm grasp on real-time cash positions and projected cash flows is essential for navigating choppy waters. By supporting faster, smarter decision-making, NetSuite’s cash flow toolkit helps your business remain agile and resilient – no matter what the future brings.

You don’t have to feel uncertain or reactive when it comes to cash flow. NetSuite’s visibility, control and automation instills confidence that you’re proactively managing liquidity and making the most of your working capital. You can optimize cash flow today while still investing strategically for tomorrow.

So whether you’re a fast-growing startup looking to stretch your funding, an established enterprise seeking to improve working capital efficiency, or any business in between, the time is now to elevate your cash flow game. NetSuite can be a powerful ally to unleash cash flow as an engine for stability and growth. By connecting your people, processes and systems around this mission-critical metric, you’ll build a lasting foundation of cash flow excellence.