Top 3 reasons why treasury enterprises are adopting automated cash flow forecasting software instead of spreadsheets

What is the function of cash flow forecasting software?

Cash flow forecasting software is used to forecast different cash flow categories spread across multiple regions, entities, and time horizons.  It collects cash flow data from various sources and provides real-time visibility with reports, dashboards, and analytical tools.  Having accurate forecasting allows businesses to foresee significant cash gaps and avoid missed payments. Cash flow forecasts give companies the foresight to take corrective action, such as fine-tuning strategies, refunding assets, or approaching lenders. It saves enterprise treasury teams time and effort while improving output quality.

Top 3 reasons for using cash flow forecasting software over spreadsheets

The following are the key reasons why cash forecasting software outperforms spreadsheets:

1. Adding customer-specific variables: Adding more customer-specific variables gives a more realistic view of payment patterns and helps you understand different customer payment patterns, improving the working capital of a business by ensuring prompt payments from customers.
   
2. Increasing forecast accuracy and frequency: In forecasting, spreadsheets support static algorithms such as regression, averaging, and algorithms, but these fail to forecast complex categories such as Accounts Receivable and Accounts Payable accurately. However, Artificial Intelligence supports the development of specialized algorithms for each category to improve accuracy. High-frequency forecasting is not feasible with manual forecasting due to bandwidth constraints. Furthermore, the spreadsheet-based forecasting reports are dead-on-arrival due to the high turnaround time. AI-based forecasts, on the other hand, are updated in real-time to present the most up-to-date figures.
3. Performing variance and scenario analysis: Variance analysis aids treasurers in making more informed and precise budgeting decisions. It aids in the tracking of the success and failure of cash flow forecasts by comparing forecasts to actuals. On the other hand, scenario analysis helps companies proactively manage risks by minimizing the effects of possible future events and situations. It helps companies make more informed decisions by examining the risks of various scenarios.

Major advantages for enterprise treasury with business cash flow forecasting software

Here are some of the benefits of business cash flow forecasting software for treasury departments:

• Seamless integration and automated data gathering: Cash forecasting software integrates seamlessly with data sources such as banks, ERPs, and TMS. APIs and RPAs allow data to be combined automatically in real-time, enhancing effectiveness, reducing manual tasks and costs, and reducing human error.
• Reduced forecast turnaround times: Since data gathering and forecasting are automated, treasurers can get real-time cash forecasts that help them manage cash flow fluctuations by allowing them to make timely decisions.
• Timely reporting: Due to the reduced forecast turnaround time, reporting is done in a timely way. This helps to understand the company’s financial status.
• Reduced idle cash: Cash forecasting enables businesses to invest surplus cash and earn interest income by utilizing idle cash.
• Better decision-making for investments and M&A:CFO’s office in making confident M&A, business expansion, and repatriation decisions. Treasury gains more credibility as an outcome of this.
• Effective cash and risk management:The software helps optimize the cash conversion cycle by releasing trapped working capital. This helps to improve cash and risk management by monitoring real-time cash inflows and outflows on corporate operating, investing, and financing activities.

Get in touch with our solution experts to overcome the bottlenecks of cash forecasts using cash forecasting software.