Setting cash flow limits in Rise Business

Effective cash flow management is crucial for the sustainability and growth of any business. Enterprises that control expenditures have more chances to maintain financial stability, make informed decisions, and navigate unforeseen challenges. By ensuring that cash inflows are consistently monitored and aligned with outflows, businesses can prevent liquidity crises, optimize resource allocation, and enhance overall operational efficiency. A well-managed budgetary control system not only supports day-to-day operations, preventing numerous cost overruns, but also positions a company for long-term success in a competitive marketplace.

Recently, one of our clients in Turkey aimed to enhance their control over expenditures. We implemented it using cash flow limits, which enabled them to gain insights into their spending patterns, revealing unexpected areas of overspending. In this article, we will outline the steps you need to take to set cash flow limits in Rise Business and conduct monthly analyses to optimize expenditures.

Key features of limiting in Rise Business:

• Three dimensions: Company, Business unit, and Cash flow item.
• Limits are set for each month.
• Strict and soft control.

SETTING UP THE SYSTEM

To control cash expenditures in Rise Business, we will need the following settings:

• First, we need to enable Master data and settings > Treasury and AR/AP accounting > Cash forecasting > Payment requests. This document allows us to approve every payment we are going to make and therefore avoid unnecessary spending.
• Once the checkbox is selected, we can specify By documents of cash flow limits in the field below it. This enables a special Cash flow limits document where you can set up limits by cash flow items.

You can further set up this cash flow limits document. The first two settings, By company and By business unit, add the Company and Business unit fields to the document, allowing you to set up different limits by each company and business unit you have in the system. If you don't need different limits by companies and business units, leave the checkboxes cleared.

The most important checkbox here is Control limit excess. If it is selected, you cannot post payment requests if the limit is exceeded (strict control). If it is cleared, the request is posted in any case, but you can still analyze limit excess or balance in a special report (soft control).

SETTING UP CASH FLOW LIMITS

To set cash flow limits, use the Cash flow limits document located in the Treasury section.

In the document header, specify the company and business unit to which these limits will be applied. If these dimensions are not enabled in the settings, they will not appear in the document. In my case, I have a business unit but no company.

Limit are set for one month. In the table, specify the required cash flow items and limit amounts in the management accounting currency. For example, for the Legal services item, the limit is set to 1324 EUR. If you want to allow spending unlimited amounts for a particular cash flow item, do not select the checkbox in the table. This means that there is no limit for this item. In this case, the Accounting services item is not limited. If a cash flow item is missing in the table, you will not be able to spend money by it.

PAYMENT REQUESTS AND CASH FLOW LIMITS

The actual control over cash expenditures is performed in the payment request document in the Treasury section.

To make sure you do not skip this document in the payment process, select the corresponding checkboxes in the required cash and bank accounts: Allow issuing cash without payment requests and Allow debiting cash without payment requests (respectively). In this case, when you create an outgoing payment based on the document with the specified bank or cash account where this checkbox is selected, the system will ask you to register a payment request first.

Let's create a payment request and specify 10,000 EUR for the Social Security Premiums of Staff cash flow item, which exceeds the allowed limit by 2,500 EUR. The message informing us about the excess appears, and the document is not posted.

There are might be situations when the business required to spend money in excess of the established limits. For this, there is a special Over limits checkbox in the payment request. Not every user can use this feature. Only users with special rights can do it. A request with the selected checkbox does not take up the amount of the limit. The entire request amount goes over the limit.