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How to maintain cash flow during a crisis: A CFO’s advice

CFO talking to employee

Even before the pandemic, more businesses were using technology to gain new efficiencies wherever they could.  Just ask Frank Delucia, CFO at Independent Living Association in Brooklyn, New York.  

His non-profit, long-term care facility serves four boroughs of New York City. The organization provides year-round services to nearly 500 individuals with intellectual and developmental disabilities.  Like many non-profits and mid-sized businesses, the Independent Living Association has a lean finance department.  

Delucia’s team is always eager to test smarter, more efficient ways to make payments and manage treasury processes. While paper checks are still the most popular business-to-business (B2B) payment method, Delucia was looking seeking new technologies to address the long-standing inconveniences of checks and improve overall Accounts Payable (AP) efficiency. “It’s difficult when the executive director isn’t in the office and we need to physically bring checks to another board member to have them signed,” said Delucia.

Then, COVID-19 rolled across the country. 

The challenge of protecting staff and keeping payments flowing

Throughout the pandemic, Independent Living Association maintained a laser focus on health and safety for their residents and staff.  While caregivers remained onsite, COVID-19 precautions meant dramatic and immediate changes for office staff. 

“We wanted to keep the number of people coming into the office down to 25 percent,” he explained. 

Delucia and his team needed to do as much work as possible from their homes, which presented a plethora of new challenges:

  • Checks could only be signed once or twice a week by the executive director

  • Large-dollar payments were also problematic, since they required signatures from the executive director and a board member

  • There was no easy workaround for check printing and mailing, typically done from their Brooklyn office

  • Sending check stock and check printers to a home environment presented too many security concerns to be a viable alternative

bank employees looking at files

The acceleration of digitization 

When New York State on PAUSE went into effect, Delucia quickly realized the time for planning was in the rearview mirror. The finance team needed to figure out how to pay issue the 500 check payments per month to business and individual recipients.  They needed a cost-effective, easy to manage method that fit both audiences.  Delucia knew digital payments were part of the solution. 

The Independent Living Association was able to find a new payment platform that gave Delucia and his team the ability to maintain their cash flow during COVID-19 (and beyond), while working wherever and whenever they needed.   But, Delucia sees other benefits that extend far beyond the COVID-19 crisis.

Businesses across the United States continue to gradually reopen, while confronting a vast sea of unknowns. From grappling with the future of work to preparing for rolling lockdowns by city, county or state, or an unanticipated shut down for sanitization – the opportunity for further disruption looms. Read on to discover insights on how your business can maintain cash flow no matter what happens next and be better prepared for the future of work. 

1. First, talk to your financial institution. 

A growing number of banks and credit unions are partnering with technology providers and Fintechs to offer new digital tools and technologies for businesses. With many financial institutions are making fintech partnerships a key priority in 2020, contacting your financial institution is a good place to start when looking for new digital tools to help with cash flow. 

“I called our bank and asked if they have something where we can batch and send checks electronically,” Delucia said. 

The bank suggested a new, low cost digital payment platform that had become available on the market in early 2020. 

Delucia chose to implement the platform because it allowed them to maintain their existing bank relationship and the banking services they use to safeguard physical checks from fraud, such as positive pay. The platform also makes it easy to track payment status. 

“I truly appreciate the fact that they [our bank] gave us this solution,” he said.

The bank’s choice to leverage a trusted business technology partner created new opportunities to help the Independent Living Association improve business continuity and be more cost effective, despite unprecedented circumstances. 

2. Try not to reinvent the wheel. 

Adopting new digital payment alternatives can be expensive and time consuming. Many technologies often require extensive IT support, custom development or even switching banks.  In Delucia’s circumstances, COVID-19 had caused enough disruption and stress to the business. There was no time to put his facility through a massive amount of change. “Saving time, saving money, saving duplicate processes—and doing it without reinventing the wheel—is very important,” he noted.

Instead of reinventing the wheel, Delucia recommends looking for platforms that easily fit into your businesses’ current treasury operations and systems. “It’s very important to have capabilities that work with current systems,” Delucia acknowledged.

When the Independent Living Association’s finance team discovered their new payment platform easily integrated with their Great Plains accounting system, “my controller and I were really excited how the platform would dovetail into our current systems, and how this was really the answer to our problem,” Delucia said.

Independent Living Association was up and running fast, because there was no need for IT involvement or for the finance team to change their payables processes. “The integration does not take long. It’s very efficient,” Delucia said, noting their setup took less than a day. 

The process for AP is also simple. The non-profit approves payments in Great Plains as usual, then sends payee information to the platform for batch disbursement. “The only thing you have to do in your general ledger is produce and upload a report,” Delucia explained. “The creation of the report took no time—the fields were already in our accounting system.”

3. Put flexibility first.

The Independent Living Association decided to take advantage of a convenient and secure digital check disbursement option (sometimes referred to as eChecks) housed within their new platform.  One of the biggest advantages of their new digital disbursement option was is the similarity to physical checks. That familiarity dramatically reduced the learning curve for AP staff and payees and increases adoption levels. 

The Independent Living Association eliminated check printing, mailing and trips to the office. They replaced physical check signatures with digital signatures and approvals. These adjustments allowed the non-profit to keep payments moving smoothly, while simultaneously protecting AP staff and check signatories. 

The switch provided a host of new bottom line benefits, too.  Delucia’s team no longer had expenses associated with check stock, printing envelopes, paying postage and investing in the check printing equipment. 

The non-profit also benefits from greater control over their cash flow. Instead of managing cash flow by calculating mail float and estimating delivery dates, eChecks provides greater control of payment timing. Treasury staff can pay early to take advantage of invoice discounts, or wait until the last minute to maintain cash-at-hand for as long as possible.

4. Don’t forget about your suppliers.

Ease of use is important for your suppliers, too. During the crisis, the Independent Living Association’s suppliers were also tasked with trying to safeguard their own employees and figure out how to manage cash flow while working remotely. 

Using digital payment alternatives to checks meant the non-profit’s suppliers could access their payments without ever visiting the mailbox, the office or even their bank. Unlike ACH or wires, there was no need to for the suppliers to provide bank account credentials or manage a time-consuming setup process. The only information required to receive payment was an email address. 

Instead of waiting days for a paper check to arrive in the mail, the payment arrives just minutes after the sender releases it. A secure email alerts the recipient that a printable check payment is waiting for download and deposit.  Recipients (whether it’s a supplier or an individual) can choose from multiple deposit options. They can download a check image, which they can or print and deposit at their bank branch, an ATM, or via remote deposit capture. Recipients can also choose from direct deposit, ACH, debit card, and more. 

Prepared for the future of work 

It’s no secret that COVID-19 has accelerated digitization. “The COVID-19 pandemic pushed us,” Delucia said. And, while no one loves the circumstances that prompted their digital transformation, Delucia is confident in the strength of his fellow New Yorkers and his colleagues. “New Yorkers tend to band together, and we’ll get through this, too,” he said. 

The Independent Living Association team can now work 100 percent remotely, with no disruptions to their AP routine. Delucia’s team has options to manage their workload effectively, now and in the future.  More importantly, the non-profit is better positioned to maintain culture of caring and fulfill their mission of providing first-class care and accommodations to hundreds of individuals with developmental disabilities.

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