ROI is a critical factor for the introduction of any new software into a company’s tech stack. Like any other tool, software has a learning curve and a cost, usually in the form of an ongoing subscription fee. The benefits arising from these investments must be tangible and quantifiable to the user. In the case of treasury management systems including Balance, the return on investment is easily calculated and the economic benefit can be readily quantified. The ROI of an intelligent treasury management system encompasses time savings, interest earnings, and risk mitigation.
When a finance professional implements a treasury management system, the most obvious and immediate benefit is the consolidated view of all bank balance and transaction information in a single interface. Monitoring dozens or hundreds of bank accounts, credit card balances, and loan accounts across a handful of banks typically consumes tens of person-hours per month. This exercise results in a spreadsheet with data that is stale within hours, so it must be updated on the next day or the next week. Imagine spending 30 hours per month at the fully-loaded cost of $40/hr. That’s $1200 to compile data that is only fresh and relevant for a couple of hours. This process is further complicated by job turnover, which diverts managerial attention to mechanical tasks that don’t move the business forward.
In today’s high interest rate environment, there is tremendous opportunity to earn impressive returns even on relatively small amounts of idle cash. The first step in earning those returns is identifying the locations of the idle cash and the corresponding interest income. The most fundamental function of a treasury management system is to display all of the cash balances, and the interest earnings of those accounts. Balance also uses artificial intelligence to inform the user when idle cash can be reallocated to better optimize for interest income. Even $500,000 in today’s market can earn over $25,000 in a single year with risk-free investments.
Running out of cash is the biggest risk that most companies face. Cash is the lifeblood of a business, and must always be top of mind for financial managers. Balance helps mitigate the risk of a cash shortage and the corresponding fallout, which can be catastrophic. Of course, knowing exactly how much cash a company has on-hand in real time and having the ability to build an AI-assisted cash forecast drastically reduces the changes of an unexpected cash shortage that can lead to insolvency.
Doing things the way they have always been done sets a dangerous precedent. As technology evolves and a business becomes more complex, it’s imperative to prioritize a culture of efficiency and precision. The economic implications of intermittent cash visibility can add up over time. At the minimum, manual data collection causes latency and accumulated labor expense. A more severe symptom of poor cash visibility can be a cash crunch resulting in a large unforeseen expense or an existential crisis.
