How Accurate A/R Forecasting Helps Optimize Liquidity
Effective ways for Treasury to optimize liquidity through accurate Accounts Receivable forecasting
Chapter
02
How Accurate A/R Forecasting Helps Optimize Liquidity
3.1 Distressed Businesses:
- Forecast daily and accurately to predict available cash within one-week horizons
- Work with your banks for flexible utilization of credit revolver
- Adopt aggressive A/R collections for all customers
3.2 Cash Deficit Businesses:
- Forecast in short term horizons to borrow proactively at LIBOR rates vs overnight sweeps
- Check available balance in credit revolvers and commercial papers
- Adopt aggressive A/R collections for risky customers
3.3 Cash Rich Businesses:
- Reduce variance for long-term forecasts
- Invest surplus cash to achieve interest gains
- Focus on business expansion/M&As/repatriation
- Run scenario analysis to identify potential business opportunities
3.4 Cash Surplus Businesses:
- Understand the benchmark accuracy for your industry
- Support the CFO’s office for quarter-end business decisions
- Invest in technology to track variance and cash positions
The Drivers of Cash Forecasting
