The development of cash culture, more than ever necessary for companies?

Yesterday evening, the Fed made its decision regarding the increase in the Federal Funds Rate, or “rate on federal funds”: its key rate will increase by 25 basis points, from 0-0.25 to 0.25-0.50. Janet Yellen is waiting to measure the impact of this decision on the economy before deciding on a future rate increase. The financing of companies is affected by this decision, which obviously has an impact on the interest rates set by the banks.

The trend will be bullish a priori, especially if the Fed’s next moves are to raise rates again after a decade of almost free money. In a globalized economy, the eurozone must adapt, and this decision will soon have consequences for the financing of companies, both American and European.

In this financial context, the anticipation by companies of their internal and external financing needs through the construction of cash forecasts and the optimization of the WCR becomes very important.

Our cloud forecasting and debt collection solutions provide companies with a clear benefit. What benefits and ROI can companies expect from the use of our solutions in the short term and in the long term?

Our Cloud Debt Collection Solution has a ROI that is easy enough to quantify. By reducing the customer’s outstanding customer, Taiga Cash Collection allows a direct impact on its Working Capital Requirement.

With Taiga Cash Collection, the company can reduce its need for financing. However, the use of financing generates interest payable, which has a negative impact on cash flow. By reducing the BFR of companies, Taiga Cash Collection brings a return on investment which represents at least 3 times the annual cost of use of the solution.

To this first direct benefit, one can obviously add the added value of Taiga Cash Collection on the operational aspects of the management of the outstanding client. Thus, beyond the reduction of the outstanding customer, our solution allows companies to gain productivity.

The ROI of Taiga Cash Forecast, a Cloud forecasting solution, is more complex to measure, but just as important. This solution makes it possible to anticipate the cash flows of the company, which leads to a decrease in the use of the loan and a better planning of the financing needs. Companies can negotiate their rates with banks in the best possible conditions thanks to this ability to anticipate. Indeed the negotiated rates are lower when the communication of financial information of the company is transparent, especially when the company is not in immediate difficulty of cash. Anticipating cash requirements also makes it possible to anticipate the internal financing of the company, and intelligently allocate resources to entities that are expected to default to cash. On the other hand, anticipating cash surpluses will optimize the company’s investment decisions.

On the operational side too, Taiga Cash Forecast promotes the implementation of a cash culture in the company. Our solutions and our teams support companies in the development of this cash culture necessary for their financial growth. We help put cash at the center of financial concerns. This is a critical issue that leaders need to be aware of in their decision-making process. For receipts, this cash culture is important to anticipate the billing terms during the sale. Poorly controlled payment delays have a negative impact on companies’ cash flow. In the same way, a company will have every interest in negotiating in the terms of the contract that the payments of the customers are made by transfer, and not by check, in order to limit the operational costs (accounting and mail) related to the payment by check. For disbursements, our solutions promote harmonization of cash outflows. Better smoothing the payments of supplier invoices, combined with the development of a corporate cash culture, limits the use of financing and unplanned bank overdrafts to significant interest costs.

In a context of high economic competition, our solutions improve business efficiency by optimizing business processes. Anticipation of cash requirements is crucial for the good financial health of companies. An improvement in productivity is measured on the management positions of customer outstanding and cash flow forecasts. Taiga Cash Collection can reduce the direct costs of debt collection, for a significant return on investment of at least 3 times the cost of using the solution. For businesses, using Taiga solutions means using cloud solutions in SaaS (Software as a System), which has additional benefits. SaaS gives 24/7 access to our solutions and works on the principle of an annual subscription: the cost of use for businesses is thus lower than other possible alternatives.

At Taiga, we think our tools in the direction of developing a cash culture, which is essential to maintain and improve the competitiveness of our customers.

Mohamed Ameziane & Constance Gavini

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