The complete guide to corporate cash management

Corporate cash management is the process of collecting, monitoring, and controlling your company's cash flow. Healthy corporate cash management keeps your business running smoothly, from paying vendors on time to having enough reserves for unexpected investment opportunities.

At its most basic level, a cash management process tracks three fundamental movements, including money coming in, money going out, and money sitting in your accounts. These are otherwise known as receivable, payables, and liquidity, respectfully. Yet, advanced corporate cash management goes beyond basic tracking. It involves forecasting future cash positions, optimizing payment timing, and investing excess cash to generate returns without risking your business’s financial health.

For most companies, corporate cash management solutions include a combination of processes, policies, and technology. You might use automated tools to accelerate collections, negotiate payment terms with suppliers to preserve working capital, or establish credit facilities to cover temporary shortfalls.

Strategy differentiates basic bookkeeping and true cash management. While bookkeeping records what happened, cash management determines what will happen and helps you answer questions such as if you should take an early payment discount or if you can afford to hire next quarter.

While your business can have impressive revenue growth and healthy profit margins on paper, without actual cash in the bank, you can't pay your bills. That disconnect between profitability and cash flow can come as a surprise.

Corporate cash management serves as an early warning mechanism for your financial health. It can help you spot potential financial shortfalls weeks or months in advance, giving you time to adjust. Instead of scrambling to make payroll or missing out on growth opportunities, you can make informed decisions backed by real data.

Maintain solvency

Solvency is having enough cash to meet your obligations when they're due. Although it’s simple in principle, timing mismatches between receivables and payables can create constant challenges. For instance, your biggest customer pays on net-60 terms while your suppliers demand payment in 30 days. Without active cash management, that gap can drain your reserves.

Effective corporate cash management solutions allow you to bridge these timing gaps through planning and use of credit, if necessary. You'll know exactly if a cash shortage could occur and have plans in place to address it before it threatens your operations.

Create financial stability

Financial stability means building resilience into your business model. Companies with strong cash management maintain appropriate reserves, diversify their funding sources, and avoid over-reliance on any single customer or credit line.

This stability can help your business grow during good times and maintain operations during bad times. When competitors struggle during downturns, you'll have the resources to maintain operations, retain top talent, and possibly acquire distressed assets at favorable prices. During growth periods, you can invest confidently without overextending your business’s financial health.

Reduce costs

Poor cash management can quickly become costly. If you’re not managing your cash properly, you can face late payment penalties, overdraft fees, and emergency funding costs. Meanwhile, excess cash sitting idle in low-yield business bank accounts is a missed opportunity for high returns.

Smart and informed cash management minimizes or eliminates these costs. By optimizing payment timing, you can capture early payment discounts from suppliers and by maintaining appropriate cash reserves, you avoid expensive short-term borrowing.

Strategic planning

One of the most impactful aspects of corporate cash management is that it enables you and your leadership team to think strategically. When you understand your current cash position and where you’re headed, you can make proactive decisions about hiring, expansion, and investment. As a result, you can react to immediate needs while also improving your business’s position for long-term success.

The strategic thinking that results from healthy cash management allows your cash position to become a competitive advantage. While competitors may hesitate to make decisions due to uncertainty around cash standing, you can move quickly on opportunities because you know exactly what you can afford and when.

Good corporate cash management means understanding the elements that determine your cash standing, including money coming in, going out, forecasting, and liquidity.

Cash flow forecasting

Cash flow forecasting is the process of estimating your future cash inflows and outflows over a specific period. With a good forecast, you can see exactly when cash will flow in and out of your business over the coming weeks, months, and quarters.

Start with a rolling 13-week cash flow forecast that you update weekly. This timeframe gives you enough visibility to spot problems early while remaining accurate enough to be actionable. Include all major inflows, including customer payments, loan proceeds, and investment income, and outflows, which includes payroll, rent, supplier payments, and debt service.

In order to accurately forecast your cash flow, you’ll need to have a good grasp of your collection patterns and payment cycles. If customers typically pay 45 days after invoicing, build that delay into your projections. If you process payroll biweekly, be sure to mark those exact dates. The more precise your inputs, the more reliable your forecast becomes.

Accounts payable management

Accounts payable management encompasses all the processes and strategies you use to handle money your company owes to suppliers, vendors, and other creditors. It includes everything from processing invoices to scheduling payments to negotiating payment terms.

Strategically managing your accounts payables can improve your cash position without hurting your relationships with vendors. Start this process by reviewing all vendor payment terms and look for opportunities for improvement. This can include negotiating extended terms or implementing vendor payment automation to capture payment discounts.

With accounts payable automation, your business can streamline this process. The best AP automation software eliminates manual data entry, reduces processing errors, and gives you real-time visibility into your payment obligations. You can set up approval workflows that route invoices to the right employees automatically, schedule payments to optimize cash flow, and capture early payment discounts without constant monitoring.

Accounts receivable management

Accounts receivable management includes collecting money owed to your company by customers. This includes invoicing, payment processing, collections, and credit management, or everything that happens between making a sale and receiving payment for it.

Getting paid faster improves your cash position more than almost any other single action. That said, many companies can treat collections as an afterthought by sending invoices late and following up intermittently. Sending invoices immediately upon delivery while offering multiple payment options and following up on overdue accounts can help speed up the accounts receivable process.

To better oversee the accounts receivable portion of your cash management, monitor aging reports closely and address problems before they become write-offs. A customer who's 30 days late might just need a reminder, but one who's 90 days late may be experiencing financial difficulties. The sooner you identify and address collection issues, the better your recovery rate.

Liquidity management

Liquidity management involves maintaining sufficient cash or cash-equivalent assets to meet your short-term obligations while maximizing returns on any cash reserves. This aspect of cash management means having the right amount of cash in the right place at the right time.

To properly manage liquidity, you need to balance having enough cash available for immediate needs while generating high returns on excess funds. If you keep too much cash in checking accounts, you're likely losing potential income. With too little in checking accounts, you can risk overdrafts or missed opportunities.

Determine the balances you need within each of your operating accounts to ensure you can meet typical weekly cash needs plus a safety cushion. Putting any excess funds automatically into the best business banking accounts with high yields can help generate returns on idle funds. Be sure to look for banking accounts that offer easy access to your funds, such as same-hour liquidity.

Corporate treasury management often uses a tiered structure, which includes operating accounts for daily needs, money market accounts for short-term reserves, and insured accounts for longer-term excess cash. This approach ensures you can get high returns while maintaining the flexibility your business needs for unexpected demands.

Alongside income statements and balance sheets, a cash flow statement is one of the three core financial statements. Unlike an income statement, which shows profitability, the cash flow statement reveals whether your business is actually generating cash by tracking how much cash moves through your business during a certain period.

For corporate cash management purposes, the cash flow statement serves as a historical record and a planning tool. It shows you where cash came from, where it went, and helps identify patterns that inform future decisions. By analyzing past cash flow statements, you can spot seasonal trends, improve your cash flow management, and make more accurate forecasts.

What are the three activities in a cash flow statement?

Cash flow statements divide all cash movements into three distinct categories, each revealing different aspects of your business's financial health.

Operating

Operating activities include all cash flows related to your day-to-day business operations. This section captures cash received from customers, cash paid to suppliers and employees, interest payments, and taxes. It's the most important section for determining whether or not your business is actually generating revenue.

A positive operating cash flow means your core business brings in more cash than it consumes. A negative operating cash flow signals that you're burning cash on operations and need external funding to survive.

Financing

Financing activities encompass cash flows between your company and its investors or lenders. This includes issuing or buying back stock, paying dividends, borrowing money, and repaying loans. These activities show how you're funding your business and returning value to stakeholders. Monitoring financing cash flows helps you understand your capital structure and debt obligations, and heavy reliance on financing activities to fund operations often indicates underlying business problems.

Investing

Investing activities include cash spent on long-term assets and investments. This includes purchasing equipment, acquiring other businesses, buying or selling investments, and capital expenditures for growth. These cash flows represent investments in your company's future capacity. Although investing activities typically show a negative cash flow since you’re spending on assets, that isn’t always bad. Growing companies often invest in infrastructure, technology, and capabilities to support expansion.

Cash management can seem like a practice to ensure your business doesn’t run out of money, but when it’s executed well, it boosts your bottom line through cost savings and revenue opportunities. Some of the most obvious wins can include avoiding late fees and overdraft charges as you’ll have the operating cash to cover bill payments on time.

Early payment discounts offer another way that cash management can boost your profits. Many suppliers offer 2% discounts for early payments, and this sort of discount can quickly compound into significant savings. By managing accounts payable and your cash flow to capture these discounts consistently, you're essentially earning a guaranteed return for simply staying on top of your accounts payable.

Improving cash visibility also allows you to make better operational decisions. When you know exactly how much cash you'll have available, you can negotiate better deals with suppliers, take advantage of bulk purchasing discounts, and avoid rush charges. That visibility also allows your business to take advantage of strategic opportunities. For instance, companies with strong cash positions can acquire competitors during downturns, invest in new technology ahead of the market, or expand into new territories while others pull back.

All of these downstream impacts of effective corporate cash management compound, with lower operating costs, better supplier terms, optimal inventory levels, and strategic flexibility all working together.

Liquidity risk is the danger that your business won’t have enough cash to make payments when they come due. Corporate cash management is an important aspect of managing this risk, and it does so through multiple layers of protection. First, accurate cash forecasting helps you see potential shortfalls weeks or months in advance. Instead of discovering a cash crunch when payroll is due tomorrow, you spot it early enough to arrange financing, accelerate collections, or delay non-critical expenses.

Secondly, building cash reserves provides your next line of defense. Generally, it’s recommended that businesses have enough cash on hand to cover three to six months worth of operating expenses, though the right amount varies by industry and business model. These reserves help absorb the shock of any financial surprises, giving you breathing room when customers pay late or unexpected expenses arise.

You can also diversify your funding sources to reduce dependence on any single source of cash. For instance, a well-managed company might combine operating cash flow, a revolving business line of credit, asset-based lending, and trade credit. As a result, if one source becomes unavailable, you have alternatives ready. As a part of this be sure to consider your active working capital management. By accelerating receivables and optimizing your accounts payable KPIs, you decrease the cash conversion cycle and reduce capital tied up in operations.

The last part of managing this risk to stress test, which prepares you for worst-case scenarios. Consider what might happen if your largest customer delays payment another month or if sales drop suddenly. By creating models of each of these situations and developing plans, potential crises become manageable challenges.

When you try to control spending, you risk strangling growth. As you look to use corporate cash management to control spending, look for solutions that give you visibility and control while keeping operations running smoothly.

Clear guidelines about who can issue approvals eliminates confusion and prevents unauthorized purchases. For instance, a typical policy may allow department heads to approve expenses up to $5,000, require VP approval for amounts up to $25,000, and need CFO sign-off above that threshold. The specific amounts vary between businesses, but be sure that the rules match the needs and structure of your business.

Be sure that any sort of approval workflows can be automated to eliminate any slowdowns during the approval process. When an employee submits an expense or purchase request, it should automatically route to the right approver based on amount, category, and department.

Beyond approvals, corporate cash management can allow you to monitor spending while it happens. Instead of discovering that your team exceeds budgets at month-end, real-time visibility lets you see it as it happens and make corrections as needed. Some cash management solutions can send alerts when spending approaches budget limits or when unusual transactions occur. In this case, if your marketing team starts approaching its quarterly budget in month two, it’ll be flagged so your finance team can review it before they exceed limits.

Category-based controls add another way to limit spending. While your business may have few limits on spending on revenue-generating activities like sales travel, you can tightly control discretionary expenses like office supplies. Some companies use virtual cards with built-in spending limits for specific vendors or expense types, which means the card won't work for unauthorized purchases.

Lastly, corporate cash management allows you to regularly analyze spending patterns and find opportunities to limit costs. Monthly reviews might show you're paying three different vendors for similar services, or that certain departments consistently overspend in specific categories. Using this data, you can consolidate vendors, negotiate better rates, or provide training where needed.

Regardless of the company size, the fundamental aspects of cash management stay the same. Yet, the execution varies: what works for a 10-person startup would fail at a 10,000-person enterprise, and vice versa.

Cash management for startups

Good cash management for startups is about extending runway and maintaining financial flexibility. In most cases, you're operating with limited resources, uncertain revenue, and constantly shifting priorities. As you grow, it’s important that your cash management strategy matches your operation, so it needs to be lean, agile, and focused on survival.

In most cases, startup cash management centers on a simple weekly cash forecast and is often managed in a spreadsheet. You're tracking burn rate closely as this shows exactly how many months of runway remain. Every dollar is important, so at this point, you might personally approve any expense higher than $1,000. With cash in limited supply, payment timing also becomes crucial.

Cash management tools help simplify this process. A single business checking account, a corporate card with spending limits, and accounting automation software might be all you need. You're focused on having enough cash to make payroll and keep the lights on.

Cash management for enterprises

Enterprise cash management operates at a different scale. Rather than focusing on extending runway, you're actively managing millions or billions in cash across multiple entities, currencies, and jurisdictions. The focus shifts from just surviving to optimizing your cash management to eliminate inefficiencies and maximize returns.

Large companies use corporate treasury management platforms that allow them to easily move cash between accounts, invest excess funds overnight, and hedge currency risks. Cash forecasts extend months or years into the future, incorporating complex scenarios and statistical modeling. At this stage, you have a procurement team instead of one person approving expenses and automated accounting processes handling month-end close.

Optimized financial stacks help support this complexity. Banking accounts offer checking, high-yield, and insured account options. Dedicated treasury teams manage cash positions globally, moving funds between subsidiaries to minimize taxes and maximize returns. Even small improvements in working capital or investment returns can translate to significantly more profit.

Cash management transition

As your business grows and begins to leave the startup phase, it can be challenging to transition your cash management. Processes that were effective at $1 million in revenue can break at $10 million and become risky for your business at $100 million. Many companies struggle during these transitions, either moving too slowly and creating chaos or over-engineering solutions that hurt their growth.

Managing this transition can start early on by building processes that can scale with your business. Starting with solid foundations, such as clean processes, clear policies, and technology that can scale with your business, and then add complexity. A Series B company doesn't need enterprise treasury management, but it does need more than spreadsheets and manual approvals. Find the right balance for your current stage while building toward future needs.

The right technology stack can allow your cash management to be a competitive advantage, but with so many tools available, it’s important to know what each tool offers and how they work together.

Spend management software

Spend management software gives you control over company spending through corporate credit cards for employees, automated expense reports, and integrated approval workflows. Instead of waiting for credit card statements, you track every transaction as it happens.

These platforms typically allow businesses to issue virtual or physical corporate cards with built-in controls to employees. You can set spending limits by role, category, vendor, or nearly any other parameter. With these business credit cards, marketing gets cards that only work for ad platforms while sales teams get travel cards with daily limits. When someone tries to exceed their limit, the transaction simply declines.

The best expense management software integrates with your accounting software, automatically categorizing expenses and syncing transactions. This eliminates manual data entry, saving finance teams time and limiting mistakes. Look for platforms that offer mobile apps, custom approval chains, and detailed spending analytics.

Corporate card program

While traditional corporate cards only provide credit access to businesses, the best corporate card programs integrate directly with your cash management platform. They offer higher limits, better rewards, and sophisticated controls that traditional cards can't match.

Advanced corporate cards allow you to issue unlimited virtual cards for specific purposes. This can allow businesses to issue a ghost card to pay for a single monthly software subscription or issue travel cards that only work for airlines, hotels, and rental cards. This granular control prevents both overspending and fraud.

There can be benefits for your cash flow as well. Many corporate cards offer 30 day payment terms, which can essentially function as free, short-term financing. Along with rewards on business spending, optimized corporate card spending can help improve cash management while boosting spending control.

Enterprise resource planning (ERP) software

For larger companies, ERP software is fundamental for cash management. This software connects every financial transaction across your organization, from sales orders to inventory purchases and payroll, preventing data silos and giving you a complete picture of cash movements.

Cloud-based ERPs can provide real-time visibility into cash positions, including across multiple entities and currencies. They automate complex processes like general ledger management, foreign exchange hedging, and cash pooling. Instead of needing to manually consolidate data from different platforms, everything flows into a single source of truth with the right ERP.

ERP integration capabilities are crucial for whether or not the platform is beneficial. Your ERP should connect seamlessly with your banking account, payment processors, and other financial platforms. This eliminates duplicate data entry and reduces errors while speeding up critical processes like accounts payable reconciliation and reporting.

Accounting software

For small to mid-sized companies, the best accounting automation software is the foundation for good cash management. Advanced platforms go beyond basic bookkeeping, offering cash flow forecasting, automated invoicing, and GL coding.

The best accounting software for mid-sized businesses makes cash management possible without deep financial expertise. Dashboards show cash positions while automated alerts warn about upcoming shortfalls and built-in forecasting tools project future cash positions based on historical patterns and scheduled transactions.

Integration with the rest of your financial stack is important here too. Your accounting software should connect with your bank accounts for automatic reconciliation, your payment processors for real-time transaction data, and your other financial platforms for complete visibility. The goal is a single interface that handles both historical reporting and forward-looking cash management.

Bill pay software

Bill pay platforms streamline accounts payable while giving you better control over cash outflows. Instead of manually processing invoices and writing checks, these platforms automate the entire payment workflow, from intake to payments.

The best accounts payable software offers multiple payment methods, including ACH, wire, check, and virtual card, and automatically generates payments for each vendor. They capture early payment discounts and schedule payments to optimize cash flow. Those that allow your business to pay with a p-card can enable your business to earn rewards on bill payments.

Advanced features include OCR invoice processing with automatic data extraction, duplicate payment detection, and fraud prevention. By centralizing all payments in one platform, you gain complete visibility into upcoming cash requirements and can forecast more accurately.

Even experienced finance teams can make cash management mistakes that impact resources and create unnecessary risk. Here are four critical errors that can impact your business's financial health.

Operating without cash flow forecasts

Companies that operate without cash flow forecasts are essentially driving with their eyes closed. Rather than anticipating bill payments, they can discover cash shortages when bills come due, forcing expensive emergency measures like factoring receivables or maxing out credit lines.

Without forecasts, you’re unable to see seasonal patterns, plan for large expenses, or identify when customer payment delays might cause problems. A rolling 13-week forecast could spot these issues weeks in advance, while you still have options like negotiating payment terms or arranging temporary financing at reasonable rates.

Not optimizing payment terms

Companies often accept vendor payment terms without negotiation, and on the accounts receivable side, extend generous terms to customers without considering the cash impact. This mismatch can create artificial cash crunches that drain your reserves.

If you pay suppliers in 30 days but collect from customers in 60, you're essentially financing your customers' businesses with your own cash. Each extra day in this gap requires more working capital. Actively managing both sides, including negotiating longer payment terms with suppliers and incentivizing customers to pay faster, can help you effectively manage cash flow.

Not earning returns on cash reserves

While your business needs to maintain cash reserves, keeping too much cash in zero-interest checking accounts wastes an opportunity to earn high returns. On $1 million in excess cash, the difference between 0% and 4% interest equals $40,000 annually, which can allow your business to invest in growth initiatives. The best cash management accounts can allow you to earn high returns with same-hour liquidity. The key is finding the right balance between accessibility and returns based on your cash flow patterns.

Scaling with manual processes

Cash management with spreadsheets can work for small businesses but can become a liability as you grow. Manual data entry introduces errors, delays visibility, and wastes the finance team’s time on administrative tasks instead of strategic analysis.

Once you realize you need better processes, you can already be facing challenges, such as struggling to consolidate data from multiple sources, missing early payment discounts, and making decisions based on outdated information. Companies that transition to automated platforms before they need them maintain better control and visibility as they scale. The investment in proper tools pays for itself through improved efficiency and better decision-making.

Managing your company's cash well is key to its financial health. When done properly, cash management turns money from something just sitting in the bank into a tool that helps your business grow. Creating accurate financial forecasts and automating important tasks gives you the clear view and control you need to make good financial choices. Whether you're a startup trying to stretch your budget or a bigger company looking to maximize profits, these basic practices help set your business up for long-term success.

Choosing the right cash management software is also very important. Look for solutions that combine spend management, corporate credit cards with clear expense policies, and automated bill pay. Good software should easily connect with the financial tools you already use, giving you full visibility of every dollar your company spends. When your cash management runs smoothly, you won't have to constantly worry about things like payroll. Instead, you'll have more freedom to focus on growth opportunities.

Brex offers an easy-to-use, all-in-one cash management platform designed to grow alongside your business. Startups can get real-time spending controls and simpler ways to handle expenses, while growing businesses benefit from having streamlined processes in place. Larger companies trust Brex for managing cash across multiple divisions and currencies.

Regardless of the stage your business is in, Brex adapts to your needs while maintaining the simplicity that makes corporate cash management actually manageable. For Dude Wipes, a flushable wipe company, the versatility that Brex offered has helped the business grow. Previously, the company’s financial stack was unable to scale with them, which made expanding difficult.

“As our spending needs increased, it became difficult to stay organized and access the higher credit limits we needed to drive further expansion,” said Lindsay Bodeman, VP of Finance and Accounting at Dude Wipes. “We wanted a future-proof solution that could scale with us and help us meet our goals at every stage of growth.”

Brex has changed that. “We’ve been earning much higher yield with Brex. Now, we can grow our parked cash with same-hour liquidity,” Lindsay explained. “Brex is more than just a credit card — they’re a first-party partner that’s ready and willing to scale with us as we scale.”

Sign up for Brex today to build a financial stack that scales with you and allows you to establish strategic corporate cash management.