Here at Vertical IQ, we are passionate about helping our customers understand industry-specific cash flow and cash management issues. Cash flow is a concern for nearly every small to medium-sized business (SMB). Evening out payables and receivables, ensuring you have enough cash on hand, but not TOO much liquidity — it’s a balancing act that can leave many SMB owners stressed and confused.

One way to help SMBs manage cash is offering industry-specific knowledge and advice. We have you covered there. Another way is to recommend to them the optimal cash flow tool for their particular needs.

It wasn’t too long ago that all businesses’ cash management was done with paper ledgers. Many small business owners still rely simply on their checkbook register to do a majority of their accounting. With the advent of computers and bookkeeping software like QuickBooks, the task has become more automated and streamlined.

Yet research shows that there is still room for improvement when it comes to managing businesses’ cash flow. According to Barlow Research’s 2020 Annual Payment Study, two-thirds of small business owners ($100,000 — $10 million in sales) say they would use a tool to help them better manage and track their cash flow. Some industries, however, are more eager than others to take advantage of such technology, with wholesale trade, finance, insurance, and real estate leading the way on their willingness to embrace this innovation.

So, what will be the next “big idea” when it comes to cash flow tools? Financial institutions are vying to create new high-tech ways to help businesses manage their cash flow, but adoption by customers often lags. This is why it is essential that banks listen to the voice of their business banking customers, to understand what they want, what they will actually use, and how bankers can encourage broad adoption across an array of industries within their book of business.

Hearing the voice of the customer

Barlow Research, a B2B market research firm serving the financial services industry and specializing in Voice of the Business Customer insights, hosts a popular webinar series called “The First Friday Webcast.” November’s event, “The Appeal of Integrated Digital Banking Cash Flow Tools,” featured an intriguing panel discussion with several small business owners.

These panelists — including owners of a business consultancy, a travel agency, and a restaurant — shared their current cash flow management processes, as well as perspectives on using digital banking and cash flow management tools. The business owners then discussed COVID-19 impacts to their cash flow such as having to cut overhead costs, take on more roles as a result of downsizing, and deal with cuts to commissions and revenue.

But particularly interesting was the panel discussion of potential cash flow tools. The webinar moderator showed the small business owners several examples of tools that are on the market, and they shared their feedback about each. They also discussed what they’d like to see in the future with regards to visual appeal/user-friendliness, and forecasting/insights capabilities, and they described potential barriers to adoption and use and servicing preferences.

A sample digital banking cash flow monitoring tool

The panel was first shown a digital banking cash flow monitoring tool that tracks inflow and outflow over time, plus forecasting based on those data points. It allows integration of multiple accounts, including checking/savings accounts, credit cards, and loans from other providers.

This tool got high marks from the panelists for usability and appearance. They liked that you could see the “big picture” snapshot of inflow and outflow of multiple accounts in one place. For efficiency, they would like to be able to see outstanding invoices/accounts receivable and checks that haven’t been cashed.

The panel was open to AI-generated year-over-year and seasonal trends, though they felt they had a good handle on forecasts with their current processes. They felt that AI-generated insights on spending, overdue invoice reminders, or flagging unusual activity would be helpful to spot mistakes or even fraud.

They agreed that the bank using their financial data to offer tailored advice about how to improve their businesses’ cash flow would be welcomed if it were a service enhancement, as opposed to a loan solicitation. They also agreed that cost would have a big impact on their interest in this tool, proposing a free or discounted trial period.

A sample digital banking accounting management tool

The second example the panel was shown was a more robust cash flow tool that could potentially replace an existing accounting system or software. Beyond simply monitoring cash flow, this comprehensive tool enables users to create e-invoices, accept online payments, track customer payments, pay bills, import QuickBooks Online data, and generate a number of reports.

One panelist liked the robust features of this tool, including the reporting and data importing/exporting capabilities. Another didn’t feel it would be of use since she doesn’t use QuickBooks, though she did see the benefit in being able to make vendor payments.

For both of these digital banking cash flow management tools, there was consensus among the panel that they are creatures of habit. As far as their cash flow processes go, they would be hesitant to “jump into the deep end” with a new tool and see it as another step to have to input information.

It takes more than technology to improve cash flow

Most SMB owners want to focus on one thing: ensuring their business is successful. In many cases, however, they also are wearing a lot of different hats to create that success. They don’t have time to seek out industry benchmark data, information on the latest industry trends, or new and better ways to manage their cash flow.

As we see from these three business owners’ feedback, there are benefits and challenges for SMBs when it comes to using digital banking technology for cash management. But fintech is just one of the tools in their cash management toolbox; it can’t replace the value of a proactive and well-informed banker who understands the nuances of the SMB owner’s industry. And this is where Industry Intelligence is key.

By taking the time to learn about their client’s industry, a banker can identify their unique cash flow management needs. For example, on each Vertical IQ Industry Profile, you will find:

  • A Working Capital Summary wheel, which gives a high-level overview of how businesses in that industry typically sell and invoice, collect, manage cash, pay, and report
  • An entire chapter on Working Capital, which not only digs in deeper on the high-level points from the summary wheel, but also includes a section dedicated specifically to common cash management challenges within the niche
  • A chapter on Banking Solutions, as well as a chapter on Bank Product Usage, showing the frequency with which specific products are employed within the industry

Facilitate your clients’ cash flow success

SMB owners are interested in technology-based solutions to help alleviate cash flow issues, but what they really want are tools and resources that will make their lives simpler — less stress, fewer headaches, more success. It can be exhausting to wear so many hats!

The pandemic has only exacerbated the SMB owner’s bandwidth crunch. Many businesses have either seen a dramatic hit to their cash flow, or, having to shutter their business entirely, have seen their cash flow eliminated. While some of these closures were unavoidable, could better cash flow tools have prevented the heartburn some business owners have suffered amid the pandemic?

Technology tools for cash flow management are extremely useful, but what SMB owners may really need right now is the human element. By educating yourself on how cash flow works in the typical business within your client’s industry, and applying that expertise to provide real-world solutions, you are offering an extremely valuable service to them. Pair that with your bank’s digital banking cash flow tools, and you can give your SMB clients sage guidance on the right balance of payables, receivables, and cash on hand.

What’s missing from your clients’ cash flow management toolbox? It just might be you!