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Using data analytics to improve SME cash flow and treasury management

The pressure facing SMEs this year is widely known, and they are looking for ways to improve their cash flow and payment decisions. Data analytics is a hidden gem that many SMEs are not tapping into. Smart data-driven decision-making could potentially be transformational for small businesses owners.

The ability to maintain positive cash flow is one of the biggest challenges SMEs struggling with during the COVID-19 pandemic. In times like these, the ability to monitor outgoings versus income, make payments to staff and suppliers, be paid on time and preserve a healthy order book of customers is an extremely difficult task, especially when considering the wider economic environment.

Governments have done their best to help business owners in different ways, direct cash injections and loans to covering staff costs. As welcome as these are, they are short-term solutions. As businesses emerge from the pandemic, SMEs need tailored support and guidance that address their challenges – not a one-size-fits-all strategy. 

What many business owners may not realise is that they are sitting on a treasure trove of information that could go some way towards helping them in this regard.


Tapping into data and analytics for smarter decisions

Every SME will be facing their own challenges. Their trading histories, payment cycles and cash reserve levels are different. Over a period of months and years, perhaps through a process of trial and error, learning new skills or human intellect, they increased oversight of their finances and improved their decision-making.

They can go one step further and make smarter business decisions by using tailored data and analytics derived from their company’s history of trading, payments and cash flow. This enables owners to have a complete view of their corporate behaviour, backed by unique data and intelligence. 

Ever wondered if are all of your payments made on time, or even too early? Or what percentage of their customer’s payments are delayed, and by how much? How can temporary cash shortfalls be addressed more effectively?

Knowing the answer to such questions and more can result in improved forecasting, detecting patterns and anomalies and automating processes. This enhances financial decision making, risk management and cash flow monitoring. Critically, the answers derived from these analytics are unique to each business.

 There are other benefits too. Time is saved from participating in routine and straight-forward processes, which improves productivity, while decision making is more informed. Furthermore, improved forecasting and predicting customer preferences can improve a customer's experience as well as new business opportunities.


The need for a treasury system to navigate difficult times

Of course, this requires access to a treasury management system (TMS), something which has historically presented a hurdle. It is estimated that three-quarters of SMEs have no treasury function; rather, they often rely on spreadsheet software, but these were never designed for this purpose. 

The events of 2020, however, have caused many people to reassess how they manage their businesses, especially while working remotely. For SMEs, modern fintech treasury management systems (TMS) could provide a solution. Once the purview of the largest corporations, there is now a wave of innovation in treasury technology systems, which has democratised access through lower costs, and offer access to customised interfaces that are easy to use and tailored to individual business requirements.

The phrase ‘cash is king’ is often used more frequently during crises to highlight the critical importance of maintaining positive cash flow. Having a comprehensive oversight of your treasury management operations is essential for effective business and risk management. Tailored data and analytics can be crucial for achieving this.

This has become even more important during the current pandemic. With the majority of finance teams around the world moving to remote working, and with social distancing expected to continue in some form throughout the year and likely into next year in many countries, now is the time to make smarter decisions to sustain small businesses through a difficult period.


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Laurent Descout

Laurent Descout


NEO Capital Markets

Member since

07 Mar 2019



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This post is from a series of posts in the group:

Treasury Management

This network brings together treasury and financial professionals who manage treasury functions. Members share a common interest in treasury, cash management, banking, risk management and investments.

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