5 min

Using excel in finance: the love/hate relationship

Author
Niv Yaar
Published
Jul 5
, 
2024

Key Takeaways

  1. While Excel remains a versatile tool in finance, its overuse can lead to inefficiencies and increased risks of errors.
  2. Relying heavily on Excel can result in bottlenecks and challenges in handling complex financial data.
  3. Modern financial tools offer superior alternatives for managing complex tasks that Excel may struggle with.
  4. Balancing the use of Excel with more advanced financial solutions can greatly enhance productivity and reduce operational risks.

Excel is the world’s most popular spreadsheet, among both individuals and companies. Finance teams in particular rely on Excel for a variety of tasks, many considering it a vital accounting and finance tool. This is primarily due to its flexibility, availability, and, let’s be honest, because it has been ingrained in finance work practices for decades.

However, Excel also presents challenges, like complexity, inability to collaborate and it being error-prone. This dual sentiment towards Excel has resulted in what has become known as the finance “Love/Hate Relationship”.

Let’s dive deeper into the reasons underscoring this relationship, what finance teams should look out for when working with Excel and when should they consider complementary solutions.


Advantages of Using Excel

Finance teams love Excel. Here’s why:

  • Versatility and flexibility - At its core, Excel is a versatile and flexible solution, and that’s the biggest benefit it offers to finance and treasury management. Excel's functionalities (see below) allow finance teams to perform any task they need, in a way that is customized to their liking. This includes financial modeling, budgeting, forecasting, data analysis and more.
  • Built-in functionalities: Excel provides multiple functionalities that finance teams need for their roles, like formulas, pivot tables, charts and more. These can be created fairly simply, allowing for cash management and predictions.
  • Robustness - Excel supports more than millions of lines of data. This means businesses, including global organizations, can easily manage all their needs inside.
  • Direct accessibility to data - Excel allows finance teams to do what they love best - touching and feeling the data. They can slide and dice the numbers in multiple, versatile ways, to explore new possibilities and identify new solutions.
  • Availability - Excel usage is so high simply because it’s included in every Microsoft Office license. This makes it accessible and available to finance teams everywhere, without having to look around for other solutions. In addition, its ubiquitous use means that finance professionals transitioning to new companies do not have to go through platform onboarding (though they will need training on the new team’s specific excel layout and formulas).
  • Cost - For those already using Microsoft Office, there is no additional cost incurred. This, as we all know, makes it a finance-favorite

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Disadvantages of Using Excel

However, Excel also poses challenges for finance teams. For example:

  • Error-prone - One of the most significant issues in Excel is the error-prone nature of manual data entry and formula setting. A simple mistake, like a misplaced decimal or an incorrect range in a formula, can result in monumental errors, affecting financial statements and strategic decisions. 
  • Cost of a mistake - A solution that is error-prone should be considered in light of the cost of being misleading or misinformed about the cash position. The likelihood of errors when copying data manually is higher, which may result in poor decisions when managing cash. Being unable to pay salaries or make vendor payments, losing funds or "parking" them in low-return channels for too long are all caused by bad-decision making that come with a high price. In every company, the cost of error is different, but without full visibility, these errors are not only more likely to occur but also take longer to discover. 
  • Complexity - Financial models in Excel are becoming more complex, with data being collected across tabs and formulas. This information maze makes the Excel difficult to navigate, audit, update, validate, track and version. Such uncertainty can lead to a lack of trust in the data, especially when significant decisions rely on these models.
  • Time-consuming - Manually entering data in excel takes time. This could include adding bank statements from multiple bank accounts and often multiple banks, inputting information from suppliers, gathering information from multiple global entities in different currencies and more. The more complex the spreadsheet, the longer it takes. 
  • Collaboration obstacles - Excel’s cannot be worked on together in real-time, making collaboration and version control a significant challenge. When decisions need to be made quickly, based on the most current data and from a variety of data sources, Excel's traditionally single-user focus can be a bottleneck.

For example, if you have 10 different departments, all with their own versions, CFOs are required to wade through the various versions to compile a total financial picture. Multiple versions of the same file make it difficult to track and explain the changes between the different versions.

  • No real-time picture of data - Collaboration obstacles also make it challenging to obtain a real-time, reliable picture of the data and cash flow. Having to manually data from different Excel versions and accounts means that the data is only as updated as the last manual entry. This makes it difficult to make real-time decisions and slows down strategic decision-making as well.
  • Takes time to master: New users can easily create basic spreadsheets and produce new charts and graphs. But if you need to use macros, pivot tables or complicated formulas, expect a very steep learning curve.
  • No integrations or automations - Excel cannot be integrated with data from other departments or with external platforms to get insights and make decisions. This makes the work repetitive, error-prone and inconsistent
While Excel offers versatility in financial tasks, its limitations in handling complex data and collaboration can lead to inefficiencies and increased risk of errors


Excel Alternatives

Excel can be used by finance teams until the finance operation becomes complicated at a certain point in a company's lifecycle. At that point, automated treasury solutions either can help address Excel’s shortcomings or replace it: the potential errors, complexities, the need to collaborate among global local teams, the unnecessary time spent manually entering data, lack of real-time visibility, the complex onboarding to existing formulas and lack of integrations and automation.

An automated treasury or cash flow management tool provides visibility, increases capital efficiency and gives finance teams full control. With automated treasury management solutions, finance teams can automatically:

  • Manage liquidity, invest excess cash, minimize debt, and eliminate unnecessary costs.
  • Foresee cash needs, identify trends and anomalies, and be prepared for different scenarios.
  • Get Al-driven cash insights and trends and eliminate the need for unnecessary, error- prone spreadsheets.

Automated tools are capable of covering their cost and more, by increasing ROI on existing cash, optimizing debt management, reducing errors and frauds and maximizing productivity. Learn more here.‍

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Cash Management
When should a company hire a treasurer?

Every finance team in every company manages treasury tasks. This is a fact of life. Companies have bank accounts, cash inflows and outflows, debt and/or investments, multiple currencies, and/or any intercompany transfers – so they have treasury operations to manage.

These operations tend to start off fairly simple – the accounting team can easily manage a few intercompany transfers, some currency exchanges, and cash flow tracking and reporting.  However, as companies grow, things become very complex, very quickly. Growth means more banks across more geographies, more currencies to manage, more accounts to balance, and much more time needed to track and control cash flows.
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The entire operation becomes very difficult with the increasing complexity and all the other, non-treasury tasks that are on the team’s plate.  In addition, beyond control, the goal of every finance team within large organizations should also be to make optimal cash decisions and manage the company’s liquidity efficiently.

That’s why large organizations have a Treasury Department. The time and resources needed to be in control of cash flows and optimize liquidity warrants a dedicated team within the finance department. This raises the question: How do you know it’s the right time to hire a treasurer and start building a treasury team? 
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As a company grows in scale and complexity, hiring a treasurer becomes essential for effective financial risk management and ensuring long-term financial health

Vast Cash Footprint

When companies manage over a dozen accounts in multiple banks and currencies, things start to get messy. It’s like juggling balls in the air, a few balls are fine but any additional ball makes the task more and more difficult, and increases the risk of dropping some balls. At this point, the team needs to dedicate time on a daily basis to track all the accounts and analyze inflows and outflows. A treasury team will take care of this, to ensure full control and avoid potential risks.

High Volume of Inflows and/or Outflows 

The higher the volume and variety of cash inflows and outflows, the more tedious it becomes to understand main cash drivers and ensure full control. Again, this starts off easy – tracking tens or hundreds of transactions is not too bad, but when this number increases to many thousands, someone (the treasury team) needs to keep track of these inflows and outflows.

Using Debt and Credit Lines.

Credit is great. It enables companies to finance their growth and working capital in an efficient manner. It can also be quite expensive. The higher the amount of credit a company uses, the higher the incentive to manage it proactively to reduce interest payments. Whether it’s choosing the best facility of the ones available, or timing credit withdrawals and repayments to reduce credit utilization, once debt is significant enough, there’s an easy ROI for proactive credit management.

Large Investment Portfolio 

While having a lot of cash on the balance sheet can hardly be considered a problem, the more available cash a company has, the higher the incentive to “put that cash to work” and generate interest income. In today’s interest environment, every $1M invested, even in a liquid money market account, can easily generate $50K interest per year.

Optimizing investments requires first and foremost to identify the amount of operational cash needed, both present and future needs, and then to make the most of the residual cash. Thus, there’s a need for proactive management of all operational accounts, benchmarking interest rates and choosing the right time horizon that supports present and future cash needs.

Rely on Manual and Error-prone Processes

Lack of automation and reliance on manual processes greatly contribute to cash flow management complexity; an automated cash flow management platform that streamlines banks and ERP data connectivity, automates reporting, creates proactive alerts and treasury policies and enables easy and smart cash flow forecasting, could potentially delay the need for a inhouse treasurer significantly.

Alternatively, the same solution can be extremely helpful to newly appointed treasurers in improving their effectiveness and efficiency, and help them hit the ground running when entering a new and challenging role. In both instances, treasury automation can be highly beneficial to mid-sized companies struggling with rapidly increasing cash flow complexity.

What Now?

As companies grow, managing treasury tasks becomes increasingly complex, which calls for dedicated Treasury departments. The need and right timing for hiring a treasurer is determined by several indicators, such as the number of bank accounts and currencies, transaction volume, utilization of debt and credit lines, and management of an investment portfolio.

Manual processes break as these challenges amplify, highlighting the need for automation in treasury management. Implementing an automated cash flow management platform can streamline operations, and delay the need for a treasurer (or enhance the treasurer’s effectiveness) but one thing is certain – treasury becomes an increasingly important and strategic part of the financial management of a company.

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Noam Mills
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Cash Management
What should I look for in a cash flow management solution?

As companies grow, so do their cash management requirements. This leaves CFOs and treasury teams with new challenges to deal with. They need to manage multiple accounts across multiple currencies and geographies, ensure optimized use of financial instruments like credit lines and investments, gain control of their liquidity status, forecast cash flows, and more. The cost of an error is high, which is why many teams turn to cash management solutions at this stage.

Modern cash flow management solutions are automated platforms for optimizing cash flow. Some of them are also AI-driven. Instead of dealing with bulky, complex spreadsheets, they collect all your cash flow data into the platform. and present it with an additional layer of analysis. This streamlines the cash management and forecasting processes, ensures up-to-date visibility, and helps lean finance teams to manage cash risks,optimize liquidity and increase ROI on excess cash or debt.

While the benefits of adopting a cash flow management solution are obvious, choosing the right solution can be challenging. The following items should not be missed when evaluating your solution. Following this list ensures you are able to maximize your efforts and free yourself up for other responsibilities. 
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A robust cash flow management solution is essential for real-time financial tracking, ensuring that your business stays on top of its financial health with accurate and integrated data
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1. Complete cash visibility

Obtain a comprehensive and complete daily view of your cash positioning, including all bank and payment accounts. Make accurate and relevant short-term and long-term decisions with confidence without errors and data integrity risks. Look for:

  • A single and centralized dashboard
  • Up-to-date liquidity snapshot of cash, investments, and restricted cash
  • Ability to filter across accounts, institutions, currencies, and more
  • Daily/monthly cash reports
  • Trends analysis
  • Customizable reports

2. Reliable and comprehensive data connectivity

Probably the most important item on the list - Ensure your cash management solution brings in all the data you need to manage your cash flow. This will ensure your data is reliable, regularly updated, comprehensive, and enables you to make decisions that support your financial needs. Look for:

  • Data connectivity via APIs to all global financial institutions, including banks, ERPs, and cash platforms, and any other financial systems that you use so that your data is regularly updated.
  • Reliable data connectivity when APIs are not available, or not supported. Make sure there are alternative methods of gathering data from all financial institutions, even those that don’t support API connection, so you can get full cash flow visibility across all your accounts.  
  • An overview and deep-dive of your cash flow and all activities including:
    - Reconciliation of transactions
    - Inflows and outflows
    - Trends
    - Historical balances

3. Reports and insights

Identify and prevent cash-related risks and identify and seize cash-related opportunities to optimize cash management and ensure errors are prevented. Look for:

  • Actionable insights for effective cash management
  • Alerts that allow immediate response
  • Ability to set up account automatic buffers to improve capital efficiency and transfers
  • FX hedging support

4. Resource efficiency

Make sure using your cash management solution is easy and intuitive to use. This will be one of its main advantages over using Excel: replacing manual work, accessible from anywhere, and freeing up you and your team for other prioritized needs. Look for:

  • Self-serve: No IT required
  • Tagging capabilities
  • Easy setup
  • SaaS solution
  • Collaboration capabilities

5. Smart categorization abilities

Manage your accounts, transactions, and cash positioning to accurately analyze your current and future cash flow. Look for:

  • Ability to create customized categories and sub-categories
  • AI-based categorization process to replace your manual labor
  • Automated ERP matching

6. Forecasting abilities

The adoption of a new cash management solution is a great opportunity to automate your cash forecasting, increase its effectiveness, and improve forecast quality by reducing human errors.. Look for:

  • Easy comparison of forecasts against actuals
  • Easy data collection and categorization, including ERP data
  • Customizable forecasting methods for your business
  • AI-based forecasting for tailored insights

7. Security

Safeguard your organizational data to ensure your cash flow data is secure, comprehensive, reliable, and available for you to use. For data security look for:

  • Compliance with leading regulations like SOC 2
  • Application security through practices like third-party penetration testing and vulnerability scanning
  • Data encryption in transmission and at rest
  • Real-time monitoring of risks and policy compliance
  • Access management- RBAC, least privilege, etc.
  • Secure development practices

What’s Next?

Choosing the right cash management solution is a strategic choice, since it will directly impact your ability to streamline financial operations, manage liquidity, and optimize cash flow. Therefore, this decision should not be taken lightly. Use this checklist to evaluate and compare different solutions. Don’t be afraid to ask vendors the difficult questions it raises, from which data they connect to to how they support forecasting, and more. By comprehensively comparing solutions, you can ensure your treasury operations will be more robust and accurate than ever. 

Learn more about Panax’s cash flow management solution that supports lean finance teams with complex treasury management needs.

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3 Steps to improve capital efficiency across multiple banks & geos

As companies grow and expand their operations and commercial activities, finance teams find themselves managing an increasingly complex cash footprint. 

They often manage dozens of bank accounts scattered across a number of financial institutions, handle accounts in various currencies, and oversee cash stored in non-bank institutions like payment processors, PayPal, and FX wallets. 

This creates a slew of challenges, from operational friction, to counterparty risk management, and down to a growing lack of control. In turn, these lead us to one of the biggest head-scratchers finance teams face nowadays, which ironically also has the most impact on their company’s bottom line – how to improve capital efficiency when cash is so extensively distributed?

In the current interest environment, every dollar counts. Finance leaders strive to invest excess cash to maximize yield on one hand, and minimize usage of credit facilities to reduce interest costs on the other. 

To address the capital optimization challenge, which is likely to intensify given the growing wave of globalization and global expansion, let’s go over a simple 3-step framework that will help your team optimize capital efficiency across multiple accounts:
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Consolidating financial accounts is a key strategy for reducing inefficiencies and ensuring that capital is managed effectively across the organization


1 - Define and measure your top-level metrics

The first step to improving any metric is to clearly define it so you can properly measure it. When it comes to capital efficiency, even a simple KPI such as % of cash in interest-bearing accounts (% IBC) is a great starting point. 

Monitoring it will undoubtedly help you lead better cash management and at the very least – raise important flags regarding your company’s cash utilization.


2 - Identify drivers and set up buffers

Once a top-level metric is defined, it’s critical to understand what’s driving it in a more methodical way. In the case of % IBC (interest-bearing cash), the second-level metric we should focus on would be the amount of operational cash needed in each account. 

Since this number tends to fluctuate significantly over time, it’s good practice to define “buffers” – minimum and maximum cash thresholds that are highly likely to ensure account liquidity. Defining these buffers can help you shed instant light on inefficiencies and opportunities for IBC improvement. 

Adding a time dimension to these buffers can often have a massive impact on your capital efficiency. Some accounts require liquidity only on specific dates, which are often monthly and follow a clear historical trend. Enabling the buffers to fluctuate with each account’s monthly needs is therefore a great way to improve your IBC rates on an ongoing basis.


3 - Set up a cash forecast and monitor your liquidity

The highest level of buffers planning is building and maintaining a rolling cash flow forecast. This is a great tool to help you understand upcoming cash needs and identify trends in a granular way, so you can more accurately understand the required buffers that optimize capital efficiency, and then take immediate action when needed.

Bear in mind that access to fresh data is key to be able to properly track balances across your accounts. While monitoring can be performed manually, it’s an incredibly tedious, time-consuming process that becomes increasingly harder to manage as companies open more and more accounts. 

Automating your bank connectivity is how you can turn real-time, account-level liquidity insights into timely decisions that will have a direct impact on your company’s performance and bottomline.

In today’s fast-paced and complex reality, the incentive to take back control, proactively manage cash flows, and optimize capital efficiency – is loud and clear. Automatically measuring, monitoring, and managing capital efficiency are key to ensuring cash is efficiently managed and effectively utilized.

Remember: any day in which cash is sitting idle is a waste. It’s time to stop the squander.

Noam Mills
5 min
Working Capital
What is working capital management?

Working capital is the difference between a company’s current assets (e.g., cash, inventory, accounts receivable) and current liabilities (e.g., accounts payable, short-term loans).

The formula is simple:

Working Capital = Current Assets – Current Liabilities

Working capital management is the process of managing these resources to meet short-term obligations and remain operational.

Simple Example:

Imagine a small retail business. Their inventory (current asset) is worth $50,000, while their accounts payable (current liability) sits at $30,000. Their working capital is $20,000. If they poorly manage accounts payable or overstock their inventory, they risk liquidity issues that could jeopardize daily operations.

Why businesses need to manage working capital effectively

Proper working capital management ensures financial stability. It’s a balancing act—too much working capital may suggest inefficiency, while too little can lead to liquidity crises. Effective management provides the flexibility to meet immediate financial obligations and invest in growth opportunities.

The link to cash flow optimization

Working capital management is inextricably tied to cash flow. By optimizing accounts receivable, accounts payable, and inventory, businesses can accelerate their cash conversion cycle (CCC)—the time it takes to convert investments in inventory into cash received from customers. Essentially, a shorter CCC means smoother cash flow.

Impact on profitability and liquidity

  • Profitability improves as funds tied up in working capital can be reinvested into high-ROI opportunities.
  • Liquidity reduces the risk of insolvency, ensuring the company can cover its short-term liabilities.

How it works

  1. Monitor assets and liabilities: track cash, accounts receivable, inventory, and accounts payable. 
  2. Analyze ratios: use ratio analysis to measure working capital management effectiveness.
  3.  Make decisions: use the information to make decisions about short-term spending and debt. 
  4. Improve processes: use software to automate processes like invoicing and payments. 

Types of working capital

To create financial strategies tailored to your business, it’s critical to understand the different forms of working capital:

  1. Permanent working capital 

Permanent working capital is funds that are consistently required to support basic operational needs (e.g., maintaining inventory). These funds remain constant irrespective of fluctuations in business activity levels and are vital for sustaining long-term operations. Properly managing permanent working capital ensures the business operates smoothly even during periods of economic uncertainty.

  1. Regular working capital 

These are funds needed to cover routine operational expenses in running a business. Regular working capital is critical to maintaining liquidity and meeting short-term obligations without disruption.

  1. Reserve working capital 

Reserve working capital is funds set aside to address unexpected expenses or financial contingencies due to unforeseen circumstances. Maintaining adequate reserve working capital safeguards the business against potential disruptions and assures operational stability under challenging conditions.

  1. Fluctuating working capital 

Fluctuating working capital requires careful planning and monitoring to effectively allocate resources during peak and off-peak periods. Proactively managing these variations helps prevent cash flow issues and supports business operations.

  1. Gross working capital 

Gross working capital refers to the total current assets available within a business, including cash, accounts receivable, inventory, and other liquid assets. By effectively managing gross working capital, the organization has sufficient resources to meet short-term obligations while enabling smooth operational processes.

  1. Net working capital 

Net working capital is the difference between a company's current assets and current liabilities, which indicates financial health. Maintaining positive net working capital is essential for meeting short-term liabilities and supporting day-to-day operations.

5 Key components of working capital

‍To streamline working capital management, businesses usually focus on the following  critical elements:

  1. Current assets

Current assets encompass resources a company can convert into cash within a short period, typically a year. These assets include i) cash and cash equivalents ii) accounts receivable, inventory, and iii) short-term investments. Managing current assets is crucial for maintaining liquidity while covering immediate financial needs. These resources allow businesses to manage operations seamlessly, respond to market demands, and support growth opportunities. Proper oversight and optimization of current assets directly contribute to a strong financial position. 

  1. Current liabilities

Current liabilities include i) accounts payable and ii) short-term loans, which represent the company's immediate financial responsibilities. Accounts payable refers to amounts owed to suppliers or vendors for goods and services already received, while short-term loans typically involve borrowed funds that must be repaid within a year. Correctly managing these liabilities is essential to maintaining the organization's financial health and smooth daily operations.

  1. Net working capital formula

Net Working Capital = Current Assets - Current Liabilities

‍Net working capital is a critical measure of a company's short-term financial health, operational efficiency, and liquidity. A positive net working capital means that the company has enough current assets to cover its current liabilities, meet financial obligations, and invest in growth opportunities. On the other hand, a negative figure could mean potential liquidity issues and necessitate immediate attention to protect the business’s stability.

What should be excluded from working capital?

Items that aren’t part of a company’s short-term assets or liabilities are not part of working capital and include: fixed assets (e.g. real estate and equipment that can’t be converted into cash within a year, long-term debt and lease obligations that go beyond a year, retained earnings or common stock, and patents and trademarks).

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Benefits of effective working capital management

Why should organizations prioritize working capital management? Read on for the key benefits: 

Improved cash flow & liquidity 

Effective working capital management ensures a steady and reliable cash flow, allowing organizations to maintain liquidity for operational needs and unforeseen expenses. By optimizing receivables, payables, and inventory levels, companies can reduce financial strain and avoid costly short-term borrowing. This proactive approach not only supports day-to-day operations but also provides flexibility to take advantage of strategic investment opportunities that power long-term growth and stability.

Better risk management 

Effective risk management is critical for mitigating financial uncertainties and safeguarding organizational stability. By analyzing potential threats and implementing robust contingency plans, companies can minimize the impact of adverse events on their operations. Proactive identification and evaluation of risks allow businesses to allocate resources strategically, reducing exposure to volatility.

This structured approach enhances decision-making processes and promotes resilience, ensuring sustained performance even in challenging market conditions.

Enhanced operational efficiency 

Streamlining processes, optimizing resource utilization, and reducing redundancies across the organization enhance your operations, improve productivity, and create better outcomes.Through working capital management, your business can create clear workflows and continuously monitor performance to align operations with strategic goals. This not only drives cost-effectiveness but also allows the company to quickly adapt to market demands for long-term success.

Stronger supplier & customer relationships 

Maintaining liquidity to meet its short-term obligations via working capital management means you’re making timely payments and fostering trust with suppliers. This reliability strengthens partnerships, leading to better negotiation terms and consistent supply chains. Similarly, optimized working capital enables businesses to offer favorable payment terms to customers, enhancing satisfaction and loyalty.

By balancing cash flow, businesses can create mutually beneficial relationships that support long-term growth and collaboration.

Challenges in managing working capital

While the benefits are clear, managing working capital is not without challenges:

  1. Cash flow constraints 

Insufficient liquidity can lead to missed growth opportunities or delayed payments. Businesses often struggle to balance incoming and outgoing cash, particularly when dealing with fluctuating sales cycles or unexpected expenses. Additionally, relying on credit or slow-paying customers can exacerbate these constraints, straining operational efficiency.

  1. Over-reliance on credit 

Excessive dependence on short-term financing can lead to high-interest costs. This can reduce financial flexibility and leave your businesses vulnerable during low revenue periods. Furthermore, it can create a cycle of dependency that hinders long-term growth and hampers the ability to invest in strategic initiatives.

  1. Inventory management issues 

Poor inventory management disrupts cash flow, as excess inventory leads to increased holding costs, while insufficient stock can damage customer relationships and diminish brand reputation. Balancing inventory levels is critical to ensure liquidity and maintain operational stability. 

  1. Accounts receivable delays 

Late payments from customers hinder cash flow and operational agility. These delays reduce the funds needed for day-to-day operations and strategic investments. Prolonged payment cycles may also increase reliance on external financing, raising borrowing costs and financial risk.‍

Strategies for working capital management

‍To overcome these challenges, CFOs and treasurers can adopt some of the following strategies:

  1. Cash flow forecasting & budgeting 

Anticipate future cash needs to avoid shortfalls or surpluses. Tools like cash flow software can streamline projections. Regularly updating cash flow forecasts to align with changing market conditions and organizational priorities, for better decision-making. 

  1. Inventory control techniques 

Implement just-in-time (JIT) or ABC analysis to maintain optimal inventory levels. These methods minimize holding costs and reduce the risk of obsolescence while ensuring that stock levels meet demand. Regular inventory audits and leveraging software solutions can further enhance efficiency and accuracy in inventory management.

  1. Streamlining accounts receivable & payable 

Encouraging faster customer payments by offering early payment discounts, which improve cash flow and reduce outstanding receivables. Additionally, negotiating extended payment terms with suppliers gives you more financial flexibility and improved management of accounts payable.

  1. Leverage financial tools & technology 

Use automated solutions like supply chain finance platforms and electronic invoicing to improve efficiency. These tools streamline payment processes, reduce errors, and provide real-time insights into cash flow, fostering more informed decision-making.

Differences between related concepts

‍Lastly, it’s crucial to disentangle working capital management from related concepts:

Working capital vs. cash management 

Working capital compares current assets to current liabilities to understand whether the finance team can pay bills and other short-term liabilities. Cash flow measures the cash inflows and cash outflows, as shown in the cash flow statement. 

Working capital vs. capital budgeting 

Capital budgeting focuses on long-term strategic investments, while working capital management is concerned with the short-term, operational aspects of managing a company's current assets and liabilities.

Take control of your working capital today

Working capital management isn’t just a financial principle—it’s the backbone of operational efficiency and business growth. For CFOs, VPs of Finance, Controllers, and Treasurers, understanding and implementing these strategies is vital for maintaining liquidity, optimizing cash flow, and securing a competitive edge.

Find gaps in your working capital strategy? Prioritize stronger relationships with suppliers, streamline receivables, and harness the power of automation to elevate your game. A balanced working capital approach today can fuel unprecedented growth tomorrow.

Naomi Goldberg
10
Cash Management
Cash flow management survey 2025: The results are in

To get more insight into the state of AI and automation in cash flow management in 2025, we commissioned a survey of 200 senior finance professionals. Its purpose is to shed light on their current methods, challenges and priorities.

This report was administered online by Global Surveyz Research, an independent global research firm. The survey is based on responses from CFOs, VPs Finance, Directors/Heads of Finance, Controllers, and Treasurers across a mix of industries including tech, E-commerce, real estate, asset- based companies, hospitality, and manufacturing.

Survey participants hailed from companies with an ARR of $50M+ and treasury departments that include 4+ people (25%), 1-3 people (25%), or no treasurers (50%), in the US, UK, DE/FR, and MEA.

What the survey found: Increasing pressure on finance teams to improve efficiency, but continued caution about adopting AI solutions 

The survey revealed that 33% of respondents faced internal operational risks, such as fraud or system breakdowns, over the past year. Additionally, 32% highlighted regulatory constraints, while 27% cited debt obligations with near-term maturities as significant challenges. This convergence of internal and external pressures is compelling organizations to rethink their approach to cash flow management.

To stay resilient, finance teams are focusing on achieving real-time visibility and implementing proactive measures to mitigate risks before they escalate.

According to the survey, areas such as audit and compliance, expense management, transaction categorization, and cash flow forecasting were rated equally as high priorities for AI implementation. These technologies are streamlining traditionally labor-intensive processes, enhancing accuracy, and freeing up valuable resources.

Larger enterprises, in particular, find AI indispensable, as its ability to process vast transaction volumes reduces the burden on finance teams and allows them to focus on strategic decision-making.

The adoption of AI is not without its challenges. Concerns around cost, regulatory compliance, and data reliability remain top of mind for many finance teams. However, the benefits of automation—from error reduction to improved forecasting capabilities—are undeniable. By investing in scalable, AI-driven solutions and prioritizing data quality, companies can future-proof their operations and ensure they are prepared to navigate an increasingly complex financial landscape.

As the 2025 survey highlights, embracing innovation is no longer optional for finance teams. By leveraging AI to overcome liquidity challenges and optimize operations, organizations can transform their cash flow management processes and secure a competitive edge in an era of rapid change. 

Download the full survey report here. 

Naomi Goldberg
5
Cash Management
What controllers need to know about treasury management in pre-treasury teams

At growing companies, or companies with lean finance teams without a dedicated treasury function, controllers often find themselves wearing multiple hats. Without a dedicated treasury team, the responsibility of treasury management often falls on their shoulders. This expanded role requires controllers to not only excel in traditional financial functions but also to master the complexities of managing liquidity, mitigating risks, and ensuring financial stability.

Here’s what controllers in lean pre-treasury teams need to know about taking ownership of treasury management:

Juggling complex treasury operations, with lean resources

Without a dedicated treasury team, controllers must take charge of several critical treasury functions:

  • Cash Management: Ensuring the organization has sufficient liquidity to meet short-term obligations while avoiding excessive idle cash. This involves cash flow forecasting, tracking accounts receivable and payable, and optimizing cash reserves.
  • Risk Management: Identifying and addressing financial risks, including currency fluctuations, interest rate changes, and credit risks. Controllers may need to implement basic hedging strategies and stay vigilant about market trends.
  • Debt Management: Managing loans, credit lines, and other forms of debt effectively, balancing costs and flexibility while ensuring compliance with loan covenants.
  • Investment Management: Making decisions about surplus funds to maximize returns while maintaining liquidity and mitigating risks.

Understanding and taking ownership of these functions empowers controllers to ensure the organization’s financial health in the absence of a treasury team.

Prioritizing cash flow visibility

For controllers handling treasury responsibilities, cash flow visibility is paramount. Accurate, real-time insights into cash positions enable controllers to:

  • Identify and address liquidity gaps.
  • Plan for short-term financing needs.
  • Optimize working capital.

Leveraging tools like cash management systems and enterprise resource planning (ERP) software can provide controllers with a consolidated view of cash across accounts, currencies, and business units. This visibility is crucial for effective decision-making.

Utilizing technology as a resource to work more efficiently

Controllers in lean teams must rely on technology to handle treasury tasks efficiently. Key tools and innovations include:

  • Treasury Management Systems (TMS): Automating processes like cash forecasting, payment approvals, and risk assessments to reduce manual work and enhance accuracy.
  • Robotic Process Automation (RPA): Streamlining repetitive tasks such as bank reconciliations and cash position reporting.
  • Artificial Intelligence (AI) and Machine Learning (ML): Using AI and ML for predictive cash flow analysis, fraud detection, and scenario modeling.

These technologies not only save time but also help controllers manage treasury responsibilities effectively, even in lean setups.

Mitigating financial risks without dedicated resources

Managing risks becomes more challenging without a dedicated team, but controllers can still establish effective practices:

  • Develop straightforward policies for managing foreign exchange and interest rate risks.
  • Stay informed about regulatory requirements to ensure compliance.
  • Utilize basic hedging techniques or financial products to mitigate risks where appropriate.

Controllers should also focus on regular reporting and analysis to monitor risk exposure and adjust strategies as needed.

Collaborating across functions

In lean organizations, collaboration is essential. Controllers must:

  • Work closely with finance and operations teams to gather relevant data.
  • Align treasury responsibilities with broader financial goals.
  • Communicate regularly with executive leadership to ensure transparency and alignment.

Collaboration helps bridge resource gaps and ensures that treasury management is integrated into the overall financial strategy.

Ensuring regulatory compliance and strong governance

Even in lean teams, compliance cannot be overlooked. Controllers must:

  • Stay updated on tax regulations, financial reporting standards, and anti-money laundering (AML) requirements.
  • Implement strong internal controls to prevent fraud and errors.
  • Use technology to streamline compliance tasks and ensure accuracy.

By focusing on governance and compliance, controllers can safeguard the organization’s financial integrity.

Balancing strategic and operational roles

Controllers managing treasury functions must balance day-to-day operations with strategic planning. This includes:

  • Evaluating short-term and long-term financing options.
  • Planning for growth initiatives, such as capital investments or expansions.
  • Assessing the financial implications of key business decisions.

By adopting a strategic mindset, controllers can contribute to the organization’s financial success while managing immediate treasury needs.

Adapting to dynamic financial environments

Economic and market changes can pose significant challenges for treasury management. Controllers in lean teams must:

  • Monitor macroeconomic trends and their potential impacts.
  • Adjust strategies in response to changing interest rates, inflation, or currency fluctuations.
  • Build contingency plans to address unexpected disruptions.

Adaptability and proactive planning are crucial for navigating an ever-changing financial landscape.

Supporting controllers in pre-treasury teams to manage complex treasury operations

Panax is designed for lean teams with complex treasury needs, so it is a perfect tool for controllers who need to manage treasury. Panax utilizes automation and AI to reduce manual work and increase strategic insights, so controllers can have full visibility over all of their cash. Panax makes cash forecasting and budgeting easy, even without a dedicated team. Panax generates reports so that controllers can get a bird’s eye view of their cash situation, but also deep dive into specific entities or currencies, so they can avoid cash risks and optimize liquidity. Get a Panax demo here. 

Naomi Goldberg
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