Managing cash flow is one of the biggest struggles that small businesses face. Entrepreneurs often rely on a patchwork of spreadsheets, scanning bank balances and mental math to track how much money is coming in and going out.
First National Bank of Omaha is piloting software that will automate these processes, from crunching historical data to forecasting cash flow patterns for weeks into the future.
The tool, Cash Flow Control, was created by Centime, a software company in Boston that worked in concert with the $25 billion-asset FNBO to develop the product. The two entities joined forces about eighteen months ago and recently announced the early access version of Cash Flow Control, which is being tested by FNBO customers as well as users Centime reached directly.
It’s a relatively rare for banks to offer this kind of product, especially to small businesses, even though many commercial customers need it and fintech rivals of banks have provided it in pursuit of greater market share.
“Small businesses never have enough money,” said Karl Augenstein, an executive director at the technology and management consultancy Capco. “With a tech startup, it’s all about the last funding round and when do I run out of cash? With ongoing businesses it’s more about, what does my cash situation look like, when am I getting money in, when do I have to pay?”
Augenstein notes that treasury management companies HighRadius and Kyriba target large, global firms. There are software programs and apps like QuickBooks that small businesses can use to manage their cash flow. A number of
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Meanwhile, M&T Bank announced a
Helping these firms make sense of their cash flow and circumvent snags could become a competitive feature for banks as more develop solutions. “When you figure out how to help small businesses with cash problems, one of the biggest issues they have, [these customers] will stick around,” said Augenstein.
David Cota, executive vice president of the business customer segment at FNBO, said the $25 billion-asset bank’s relationship with Centime founder and CEO BC Krishna dates back to his role at accounts payable automation company MineralTree. When Krishna left MineralTree and started conceiving cash flow forecasting and management tools for small and midsize businesses, “it fit really well with the problems we were hearing from our customers,” Cota said.
FNBO supplied a team to work alongside the product engineers and developers at Centime to develop the tools. It also brought in its own customers to give feedback and participate in the early access program, which is meant to refine the tool before it fully launches in 2022.
“What works in the lab and what works in reality are two different things,” Krishna said.
FNBO also made an investment in Centime, but did not disclose the terms or amount.
There are four components to Centime Cash Flow Control, which FNBO customers can access by a link from FNBO’s online banking portal: forecasting cash flow, managing receivables, making decisions about payments and tapping into credit when needed.
When users log in, Centime will use an application programming interface to pull data from the business’s general ledger in QuickBooks or NetSuite, such as current balances, open invoices and historical payments and cash flow. It will also connect to the customer’s financial accounts using an API provided by an account aggregator to help the small business get a sense of its liquidity. Centime uses artificial intelligence to analyze the data and create charts, graphs, alerts and more.
For example, a graph illustrates the business’s cash flow position now and visualizes the predicted ebbs and flows over the next four weeks. An algorithm looks at historical patterns and predicts which invoices are likely to be delayed, then adjusts the cash flow forecast accordingly. Or the business can play around with different scenarios to stretch cash flow, such as paying by a credit card.
Centime also lets users automatically set “reminder campaigns,” or emails that are customizable by schedule and tone to nudge customers to pay on time, even before the due date.
All users will be able to link a commercial credit card or line of credit underwritten and provided by FNBO to the portal and draw from it directly through Centime when they need to pay a vendor, rather than exiting the program.
“I like the idea that it has a built-in lending component so when you see cash is in trouble you can tap into it quickly,” Augenstein said.
As a whole, these features address a range of issues that entrepreneurs face and that Cota feels have not been addressed in a blanket, automated solution.
“Being able to connect the reality of their general ledger and their transaction volume into a view that gives them insight into where they can better control their cash flow has been a challenge,” Cota said. “Many of our large [corporate customers] have more sophisticated tools and teams to help with that. For small and medium-sized businesses, it can be a very manual process.”
Joining forces with a bank was key for Centime. It hopes to bring on other banks as well.
“We do not have a rich balance sheet to underwrite credit for our customers,” Krishna said. “Working with FNBO was all about, how do we make sure we can gain access to credit and that it is incorporated as part of the everyday cash management process?”
The platform is currently free of charge, but Centime is testing a pricing model with early access customers.
Eventually, Cota hopes the new tool will benefit FNBO as well as its customers.
“We are looking for the universe of our small and medium-sized businesses to find value in this and provide us with real feedback that this is helping them more effectively manage cash flow,” Cota said. “Ultimately the goal is this will be a contributor to our business customers being stronger and healthier and having better cash flow.”
