Why an Effective Working Capital Management Strategy Matters

Now, more than ever, it is important to evaluate the effectiveness of your cash management strategy, ensuring that it can support your organization's overall growth objectives. By taking a strategic approach to managing working capital, Treasury will be better able to free vital cash flow and maintain a robust financial condition.

A strong working capital management plan should include a strategic approach toward managing receivables and payables. As new technologies and solutions emerge, it is important to revisit these vital areas of treasury to ensure your organization is maximizing its working capital management opportunities.

Look to Accounts Receivables Processes for Greater Efficiency

A critical step in achieving working capital management goals should start with an examination of your organization's accounts receivables (AR) processes. By maximizing the efficiency of AR, Treasury can accelerate cash flow, improve access to customer payment information, reduce processing costs and increase funds availability - ultimately optimizing working capital.

This is where Fifth Third Bank's suite of receivables solutions can make a significant difference. Regardless of what form of payment your customers use, Fifth Third has the right solution to enable you to receive funds more efficiently. With improved processes in place, Treasury also gains invaluable insight into an organizations cash position, which ultimately allows for more informed investment and borrowing decisions.

Fifth Third has a comprehensive suite of integrated solutions that can address your organization's needs. The bank recommends taking a holistic approach to cash management processes. If you collect currency onsite at retail locations, our Currency Processing Solution (CPS) provides provisional credit to your account, giving you faster access to working capital. This in turn allows you to focus on managing your business rather than the complexities of reporting, reconciliations, and end-of-day bank deposits.

Fifth Third's strategically located Retail Lockbox processing sites convert high-volume, low-dollar payments into working capital rapidly by minimizing mail time and decreasing float, while offering reliable and timely information on every deposit.

The bank's Wholesale Lockbox Network is an effective means for automating and accelerating payment posting and collection, delivering faster remittance posting and same-day information, and most importantly, improved cash flow. Fifth Third's Biller Direct solution provides a cost-effective, always-available channel for receiving customer payments, whether through an Internet payment service site or an Interactive Voice Response (IVR) telephone payment system. This solution reduces operational costs, while offering quicker access to funds, fewer late payments, as well as increased customer satisfaction and loyalty.

For businesses that rely on check payments, Fifth Third's Electronic Deposit Manager (EDM) improves deposit and reconciliation efficiency by capturing receivables remotely. EDM is a convenient, secure, web-based solution that facilitates remote deposit capture and balancing, while helping to increase staff productivity.

The Importance of Gaining Better Control of Business Payments

Processing business payments is a vital function for Treasury - one that can present unique challenges, yet also offers significant opportunities for improving working capital management. Taking a strategic approach to Accounts Payable (AP) processes can enable you to exercise greater control over your payments, improve access to payment information, reduce fraud risk, save time on routine processes and ultimately put excess funds to work meeting your organization's crucial business goals.

Fifth Third offers a robust suite of integrated payables solutions designed to help control your business payments. A critical opportunity for treasury efficiency can be found in the financial supply chain. By taking an end-to-end approach that relies on the latest treasury technologies, organizations can free up liquidity, enabling them to deploy working capital where it's needed most. Fifth Third's Financial Supply Chain solution can extend an organization's DPO and shorten payment terms to suppliers, while providing faster payment to suppliers in exchange for discounts or access to lower cost financing.

Commercial cards are an increasingly popular solution for optimizing Days Payable Outstanding (DPO) and helping to improve working capital. Fifth Third's Commercial Card solution streamlines the accounts payable process, enabling you to negotiate more favorable rates with vendors, avoid late fees, and improve your overall cash flow.

Fifth Third's Controlled Disbursement solution allows you to take control over account balances, minimize idle balances and reduce short-term borrowing, and improve investment opportunities. This image-based solution expedites information on checks cleared, eliminates paper check storage, and helps reduce overdrawn accounts.

An Effective Working Capital Management Strategy Starts with a Dialogue

To start the year off on the right foot, consider starting a dialogue with your banking partner in order to put the best strategies in place to ensure optimum business success. Fifth Third can help you evaluate your AR and AP processes, and explore options to strengthen your working capital management plan - enabling your organization to achieve sustainable results that will support your business growth goals.

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