# Protecting cash flow during economic uncertainty
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2020-10-12
Category: FINANCE
Category URL: https://financedigest.com/category/finance
Meta Title: Rethinking Cash Flow: Prioritising Account Receivables with
Meta Description: Discover why managing account receivables is crucial for sustaining cash flow during times of crisis. Find out how AI-powered automation can help your business
URL: https://financedigest.com/protecting-cash-flow-during-economic-uncertaintyhtml

![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/untitled-design-2020-10-12t100352-1736838814497-compressed.jpg)

_Andy Lilley_ _, Chief Product Officer at_ _Rimilia_

News around established companies struggling with issues, ranging from cutting costs, furloughing staff, and pauses in trading, are hitting the headlines almost every day. It is a clear indication that any organisation, regardless of size, might struggle with maintaining a sustainable cash flow in the current climate. In fact, as the UK economy experienced [the biggest drop in over 40 years](https://www.theguardian.com/business/2020/jun/30/uk-economy-fall-covid-19-gdp-figures-coronavirus-pandemic), it is inevitable that the pandemic will have serious financial implications for virtually every industry.

Deloitte’s recently published report on ‘ [Managing cash flow during a period of crisis](https://www2.deloitte.com/content/dam/Deloitte/global/Documents/About-Deloitte/gx-COVID-19-managing-cash-flow-in-crisis.pdf)’ stresses that even businesses that seem to be in good financial shape, might be at risk of going bust. In spite of possible scenarios how the situation might unfold and how long it may take to return to business-as-usual, organisations will continue to struggle if they can’t access the lifeline – the cash that is owed to them.

**Rethinking** [cash flow](https://www.financedigest.com/xerox-shares-slide-as-annual-revenue-cash-flow-forecasts-take-a-hit.html "Xerox shares slide as annual revenue, cash flow forecasts take a hit")

Black Swan events and sudden [slumps in demand](https://www.financedigest.com/german-industrial-orders-drop-in-sept-on-foreign-demand-slump.html "German industrial orders drop in Sept on foreign demand slump") make leaders realise how important efficient cash flow management is, and can expose shortcomings of currently used solutions.

Although scrapping current financial processes might seem like a challenging task to achieve at present, the [time for businesses to rethink their approach](https://www.financedigest.com/anti-money-laundering-time-to-take-a-new-approach.html "ANTI-MONEY LAUNDERING: TIME TO TAKE A NEW APPROACH?") to managing cash is now. Today, remaining optimistic and simply ‘doing nothing’ is bound to cause severe damages to the business. Following insights outlined in Deloitte’s report, it is key to explain why applying [automation as well as prioritising account](https://www.financedigest.com/being-nimble-and-responsive-in-banking-and-business-has-arrived-thanks-to-accounting-automation-technologies.html "Being Nimble and Responsive in Banking and Business Has Arrived, Thanks to Accounting Automation Technologies") receivables (AR) is necessary to alleviate threats and mitigate economic volatility.

**Prioritising Account Receivables**

When hit by a sudden disruption, companies instinctively turn to the usual approach to optimising working capital such as cost-cutting, decreasing the number of [suppliers or even delaying due payments](https://www.financedigest.com/why-it-pays-to-pay-on-time-the-impact-of-delayed-payments-on-supplier-relationships.html "Why it pays to pay on time: The impact of delayed payments on supplier relationships"). These steps only bring along further issues such as lay-offs and poorer relationships with partners. Whilst companies take seemingly ‘necessary’ measures, AR is often left untouched and remain an untapped source of cash.

As the report suggests, “smart companies are shifting their focus from the income statement to the [balance](https://www.financedigest.com/ecbs-villeroy-lays-out-plan-for-shrinking-balance-sheet.html "ECB’s Villeroy lays out plan for shrinking balance sheet") sheet” – this is why companies should take a closer look at receivables management. By rethinking and improving credit and collections strategy, companies could free up capital that exists in businesses’ own [balance sheets](https://www.financedigest.com/ecb-policymakers-back-jumbo-rate-hike-differ-on-balance-sheet-cut.html "ECB policymakers back jumbo rate hike, differ on balance sheet cut"). In other words, companies already have the capital but are unable to spend it, due to inefficient invoice processing that for many are dependent on resources [working remotely](https://www.financedigest.com/digital-insurance-and-the-remote-working-and-studying-boom.html "Digital insurance and the remote working and studying boom").

Now more than ever, AR teams should look to not prioritise repetitive tasks, such as manual data entry, hunting down remittances and resolving exceptions. In today’s difficult economic circumstances, senior management should focus on redeploying staff to more value-adding and strategic activities, such as data analysis, [risk and customer management](https://www.financedigest.com/treasury-and-risk-management-application-market-to-bring-in-revenue-of-us-7-1-bn-by-2028-comprehensive-research-report-by-fmi.html "Treasury and Risk Management Application Market to bring in revenue of US$ 7.1 Bn by 2028 – Comprehensive Research Report by FMI").

**AI-powered automation**

A large number of organisations still lack the appropriate measures to [meet the challenges of customer](https://www.financedigest.com/how-omnichannel-cx-can-help-insurers-meet-customer-expectations.html "How omnichannel CX can help insurers meet customer expectations") management. By sticking to repetitive, [traditional financial processing they put companies at risk](https://www.financedigest.com/insurers-must-reimagine-traditional-risk-models-to-adapt-to-climate-change.html "Insurers Must Reimagine Traditional Risk Models to Adapt to Climate Change "), as the CFOs are unable to access customer information quickly. Applying intelligent automation to the account receivables significantly reduces dependency on people and manual work as well as provides real-time transparency on the [cash flowing through the business](https://www.financedigest.com/should-your-business-reconsider-invoice-financing-top-tips-on-why-reappraising-this-method-liberates-business-cash-flow.html "Should your business reconsider invoice financing? Top tips on why reappraising this method liberates business cash flow").

AR Automation leveraging [Artificial Intelligence](https://www.financedigest.com/types-of-artificial-intelligence.html "Artificial Intelligence") (AI) gives financial leaders the ability to make informed decisions faster to better manage customer relationships and mitigate any potential threats. The AI layer on top of the standard, often time-consuming, operations ensures that difficult circumstances – such as [customers struggling](https://www.financedigest.com/uk-banks-and-insurers-told-to-step-up-help-for-struggling-customers.html "UK banks and insurers told to step up help for struggling customers") to pay as well as cash collection issues – are not detrimental to the overall business.

Furthermore, the ‘analogue’ [approach to matching payments to invoices in spreadsheets requires staff to be physically present in the office](https://www.financedigest.com/cavai-tests-innovative-new-approach-for-the-home-offices-parentwise-pilot-campaign-helping-parents-and-carers-in-the-west-midlands.html "Cavai tests innovative new approach for the Home Office’s ‘ParentWise’ pilot campaign helping parents and carers in the West Midlands"). With the traditional model of workplace redefined by COVID-19, it is becoming clear that only automation can give financial [teams](https://www.financedigest.com/protecting-the-finance-team-from-burnout-to-drive-employee-retention.html "Protecting the finance team from burnout to drive employee retention") much needed flexibility. AI-powered processes allow all members to [access and gain visibility into the current state of cash flow from anywhere in the world](https://www.financedigest.com/bridging-the-gap-between-banking-and-digital-accessibility-in-todays-digital-by-default-world.html "Bridging the Gap Between Banking and Digital Accessibility in Today’s ‘Digital by Default’ World").

As Deloitte highlights, ensuring that [companies have the insight into potential financial risks their key](https://www.financedigest.com/automotive-electronics-market-key-insights-profiling-companies-and-growth-strategies-by-2026.html "Automotive Electronics Market Key Insights, Profiling Companies and Growth Strategies by 2026 ") trading partners might bring, is vital in times like this. Intelligent [automation gives](https://www.financedigest.com/how-automation-gives-fs-leaders-a-competitive-advantage.html "How automation gives FS leaders a competitive advantage") the financial teams insights into changing customer behaviour and enables them to focus on key strategic decisions. During the current crisis, financial departments are tasked with an overwhelming job of [estimating and predicting the future:](https://www.financedigest.com/egg-incubator-market-extensive-analysis-of-key-segments-of-the-industry-and-emerging-growth-factors-with-current-trends-and-future-estimations.html "Egg Incubator Market: Extensive Analysis Of Key Segments Of The Industry And Emerging Growth Factors With Current Trends And Future Estimations") Are my customers at financial risk themselves? Will they be able to pay for the [services we have provided](https://www.financedigest.com/unprecedented-constructive-disruption-to-drive-the-sleep-service-providers-market.html "Unprecedented, constructive disruption to drive the Sleep Service Providers Market")? Do we need to extend the [credit line](https://www.financedigest.com/austria-grants-credit-line-to-vienna-utility-squeezed-by-power-price-surge.html "Austria grants credit line to Vienna utility squeezed by power price surge")? In such volatile [times CFOs need](https://www.financedigest.com/time-has-run-out-3ds2-is-here-and-retailers-need-to-be-on-board.html "Time has run out – 3DS2 is here and retailers need to be on board ") real-time answers to these questions more than ever.

**Prepared for tomorrow**

Being able to [manage suppliers and understand what happened with customers’ payments helps unlock cash reserves in critical times, and stable cash flow enables a business to manage through a downturn without the need for urgent reactive change](https://www.financedigest.com/uk-at-forefront-of-fx-management-change.html "UK at Forefront of FX Management Change"). It is important to keep in mind that efficient financial management and automation implemented now, can mitigate threats to the business and give companies the [competitive edge](https://www.financedigest.com/leveraging-ai-for-the-competitive-edge-in-insurance.html "Leveraging AI for the Competitive Edge in Insurance  ") even after the crisis. Future-facing [leaders will take decisive steps](https://www.financedigest.com/eu-leaders-to-discuss-next-steps-on-energy-ukraine.html "EU leaders to discuss next steps on energy, Ukraine") now, as the cost of standing still increases with each day.


---
This blog is powered by Superblog. Visit https://superblog.ai to know more.
---