Understanding & Improving Cash Flow Cycle

cash flow

The cash flow cycle is the lifeblood of any small business. Learn about the cash flow cycle and which small business banking products can give it a boost.

How cash moves in and out of your business is known as the cash flow cycle, and poor management of this cycle can break a small business, even one with growing revenue. Below are the stages of the cash flow cycle along with the banking solutions that can help shore up deficiencies: 

Shortening the cash flow cycle

Problems often crop up as you wait for outstanding accounts receivable to be collected and deposited, creating a lag time that's known as a "cash flow gap." When you shorten the cycle, you shrink that gap. There are two main ways to do this:

  • Accelerate collection of your accounts receivable
  • Stretch out disbursement of your accounts payable

Solutions that boost cash flow

The following banking solutions can accelerate AR collections and/or stretch out disbursement of your accounts payable:

Online banking and bill pay. Simplify and speed up your banking with small business online banking.

ExpressDeposit. ExpressDeposit is a specially designed desktop scanner and software that enables you to send check images to your bank right from your office. Checks post to your account sooner than if you were to drive to the bank once or twice a week to make deposits.

Wire transfers. Send high-dollar amounts online instead of having to visit the bank.

Merchant services. Consumers expect to be able to pay with credit and debit cards. Merchant services enable you to offer your customers the latest payment processing products and services.

Positive Pay. This check fraud prevention tool compares checks presented to the bank for payment to a list of checks your business has actually paid. All others are flagged and reported to you (via email or mobile) for a pay or no-pay decision.

ACH Positive Pay. This is Positive Pay for electronic funds transfers. ACH Positive Pay guards against fraud for all ACH debits that post to your accounts by validating payments against a list of approved vendors and filters you set on your account.

ACH Credit Origination. Pay your employees, vendors and taxes automatically via ACH (Automated Clearing House) Credit Origination. This ensures that invoices are paid on the due date — and not a day sooner or later — eliminating the uncertainty of mailing checks and wondering if they will arrive before or after the actual due date. Other ACH payment benefits include lower costs, higher accuracy, increased efficiency and reduced payment fraud.

Implement any of these solutions with Cadence Bank.

Finally, one of the best things you can do to strengthen the cash flow of your small business is this: Build a great relationship with your business banker. Find a banker who understands small business needs and will collaborate with you to help you find the best solutions and achieve your goals.

Please contact us if you would like to discuss cash flow management strategies and solutions in more detail.


This article is provided as a free service to you and is for general informational purposes only. Cadence Bank makes no representations or warranties as to the accuracy, completeness or timeliness of the content in the article. The article is not intended to provide legal, accounting or tax advice and should not be relied upon for such purposes.

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