How can CEOs contribute to long-term business growth with accurate cash forecasting?

To achieve a winning position, companies can fill this gap by:

• Investing sufficient resources and talent in confident bets: Long-term companies recognize strategic moves that will keep them ahead in the long run and devote vast resources to strategic initiatives like the innovation of products, marketing and sales, and skill development.

• Creating a portfolio of strategic initiatives with returns that outperform the cost of capital: Companies must commit resources to the initiatives that deliver returns above the cost of capital. A company makes a lot of investments but not every investment that a company has to make more than its capital cost. But if the entire strategic endeavor makes more than its aggregate capital cost, then a company can predict to make value over the long term.

• Dynamically allocating cash and personnel to the businesses and activities that generate the highest value (via divestitures if necessary): Operating a long-term company does not mean maintaining the exact business mix for elongated periods. Long-term management requires executives to observe the company’s reputation and enter or exit businesses as the competitive landscape changes (via investments or purchases and divestitures, if necessary). Companies should also reallocate skills as often as they reallocate capital.

• Creating value for employees, customers, and other stakeholders in addition to shareholders: Suppliers who are well-facilitated work together more collaboratively and well-satisfied controllers are more likely to grant operating licenses. Long-term companies focus on improving results for all their stakeholders, not just those who own shares in the business.

• Resisting the urge to take steps that will only increase your short-term gains: Long term businesses resist three attractions: growth investments, cost-cutting that can weaken the company’s competitive status, and ultimately making uneconomic alternatives to decrease the volatility in revenue and gains.

Long-term forecasting includes a time frame of six months to five years that gives CEOs an overview of a company’s financial demands and the future availability of investible excess. Even in major corporations, treasury teams are normally small and overloaded. By automating a time-consuming portion of their daily routine, they can devote more time to strategic work that adds value to the company.

AI-enabled cash forecasting helps CEOs with long-term planning by:

• Automating tasks that are highly manual, low-value, and prone to errors: Automating cash flow forecasts will increase visibility into day-to-day cash positions. Thus treasurers can improve collection strategies, liquidate assets, and can also borrow in advance at lower interest rates thereby enabling the CEO to make long-term decisions by freeing up working capital.

• Supporting cash allocation decisions such as capital expenditures, share repurchases, dividends, and so on: Allocation of idle cash can be done effectively by using AI-enabled cash forecasting. This idle cash can be invested by purchasing new products, extending or restructuring the business, acquiring another company, or pursuing foreign markets. Therefore achieving competitive advantage alongside a plan for the future.

• For long-term views, increasing confidence in real-time decision-making: Automated cash forecasting enables the capture of real-time data automatically and reserving them in a central repository. Automatic recovery of data across all entities allows CFOs to implement data-driven decisions by minimizing the turnaround time.

• The ability to undertake ‘what-if’ scenario assessments with ease and flexibility: By making adjustments to the forecasts, the treasurers can comprehend the extent of the impact on cash flows due to the various best-case and worst-case scenarios. This will enable them to design strategies to withstand possible financial problems.