ARTICLE
Fast growing businesses demand an efficient cash management system
Manual cash collection is a process that has been used for centuries, but it is slowly becoming outdated and inefficient. It is a process that is time consuming and prone to human error. As businesses continue to grow and evolve, the need for a more efficient and accurate method for cash pickup and cash delivery for B2B businesses is becoming more and more apparent. The most obvious problem with manual cash collection is the time it takes to complete the process. It is time consuming to manually count and record each transaction, especially if the business is dealing with large amounts of cash. In addition, the manual counting process can be prone to error, leading to incorrect amounts of cash being collected. Another issue with manual cash collection is the risk of fraud. It is much easier to commit fraud when a business is using manual cash collection and there is no way to track the transactions. This can lead to lost profits and potential legal issues if an individual is found to have committed fraud. Moreover, manual cash collection is very inefficient and costly. It requires a large amount of resources, including personnel and materials, to properly collect and record, and deliver the cash collection at a bank. This can lead to increased costs for the business to the detriment of their profitability.
As emerging markets around the world continue to grow, the need for efficient and reliable financial operating systems is becoming increasingly important. Financial operating systems in these markets must be able to handle the unique needs of fast growing businesses – digitising inhouse cash – while also providing a secure and reliable platform to ensure the security of their customers’ data and funds.
What is a financial operating system (FOS)
A financial operating system (FOS) is a type of software that is designed to manage and automate the financial operations of a business or organisation. The main function of a FOS is to streamline the various processes involved in managing the financial aspects of a company – such as accounting, budgeting, and reporting of in-house cash collections, cash pickups from various points of sale, and cash deliveries made to their bank account.
FOSs are typically used by businesses and organisations that have complex financial operations – generating large amounts of cash payments from multiple touch-points on a daily basis – as they provide a central platform to digitise and manage all of the different financial processes for all inhouse cash transactions. This can help to reduce the risk of errors and ensure that the financial information is accurate and up-to-date. Fast growing SMEs and startups in emerging markets can greatly benefit by adopting a FOS to efficiently manage their finances.
There are a variety of financial operating systems in the world. Some are better suited for large corporations in developed markets, and others are tailored to the needs of fast growing startups and organisations in emerging markets. One such solution for cash management is the financial operating system created by Loop for fast growing B2B businesses in emerging markets. Here are some of its key benefits:
Real-time financial information: Loop’s FOS has the ability to digitise inhouse cash and provide real-time information on the financial performance of a company, allowing managers and decision makers to make informed decisions quickly and effectively. The system should also be able to provide real-time updates on account balances and transactions to ensure customers are able to easily manage their finances.
Process various payment types: One of the most important aspects of Loop’s financial operating system is its ability to process a variety of payment types. This means that the system can handle both traditional payment methods, cash, as well as newer methods such as mobile payments. Furthermore, the system integrates with existing banking infrastructure to ensure that payments are processed in a timely and secure manner.
Integration with other systems: Loop’s FOS can be integrated with other business systems, such as enterprise resource planning (ERP) and customer relationship management (CRM) systems. This allows for a seamless flow of information between different departments and ensures that all of the data is accurate and up-to-date.
Automation of financial processes: Loop’s FOS automates many of the tedious and time-consuming tasks involved in managing the financial operations of a company, such as reconciling accounts and generating reports on digitised inhouse cash. This frees up time for employees to focus on more strategic tasks.
Robust security features: Loop’s FOS has robust security features to protect sensitive financial information and prevent unauthorised access, and includes features such as encryption, authentication, and access control.
Customer service: Another key component of Loop’s financial operating system is its ability to provide adequate customer service. This includes providing support for customer inquiries, troubleshooting issues, and assisting with account management.
Tried and tested cash management solution for B2B clients
One of our client’s is Unified Distributors, who are among a handful of certified distributors for Coca-Cola Pakistan. With one of the biggest distribution fleets in the country, Unified Distributors has been serving small and medium-sized retailers with Coca-Cola’s entire product portfolio in some of the most demand-intensive regions of Pakistan.
Unified manages a dense network of retailers served through a privately owned distribution fleet covering the Northern Region of Pakistan. Across this network of over 3500 retailers, payments for deliveries are almost exclusively received in cash.
Manually managing inhouse cash imposed serious implications on the operational efficiencies of their business. Once the cash was collected at point of sale, every single bill of currency then had to be counted, sorted, accounted for, and then finally deposited into bank accounts during banking hours – subject to their terms and conditions. This imposed substantial direct and indirect costs on their business.
The lack of transparency associated with manual cash handling and management resulted in discrepancies between the cash collected from points of sale to the cash deposited in the company’s bank account. Overall, all these issues with manual cash handling and management compounded to the detriment of Unified Distributor’s growth and profitability – daily working capital requirement increased by more than 20%.
To solve this major issue, Unified started using Loop Machines (cash deposit machines) and Loop’s financial operating system to completely automate and digitise their cash collections starting at the point of aggregation. This enabled Unified to have real-time access to financial information, gain instant access to in-house cash deposited in Loop machines, track their cash deliveries in real-time, and ultimately make their cash lifecycle transparent to avoid fraud and theft.
Since adopting Loop’s financial operating system, Unified is able to make instant digital payments in realtime by leveraging their inhouse cash stored in Loop machines on their premise, that are connected to Loop’s FOS that integrates with existing banks that receive data about inhouse collections, and grant access to their collections instantly. Moreover, through Loop’s FOS, Unified used the feature for cash pickup and cash delivery that allowed them to ‘see all authorized cash delivery services near me’ and hire a cash in transit service directly through the digital platform. Loop’s digital platform enabled Unified to track all their cash deliveries in transit in real time. The cash conversion cycle, from the point of entry to account settlement, has been reduced from 48 hours to less than 24 hours. The 70% acceleration in cash conversion cycles in turn reduced the need for daily working capital by 20%.
Conclusion: A financial operating system is a valuable tool for fast growing businesses.
Loop’s financial operating system provides a comprehensive solution that meets the needs of emerging markets and fast growing businesses, with features such as real-time financial information, integration with other systems, automation of financial processes, automation of cash pickups and cash deliveries, and robust security features. In addition, the customer service feature ensures that customers are supported in their efforts to manage their account, and any issues are quickly resolved. With these features, Loop’s FOS can help businesses in emerging markets manage their finances efficiently and effectively.
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