Role of AI-Enabled Cash Forecasting for Orderly Deleveraging
Use this e-book to understand the pros and cons of leverage and how the treasury department can align with the company?s goal during a volatile economic climate.
Chapter
02
Role of AI-Enabled Cash Forecasting for Orderly Deleveraging
1. Be a Strategic Ally to the Business by Having Big Picture Visibility on Cash
Utilize 9 Months Cash Forecasts into the Future
Treasury can continually increase their profile by providing proactive guidance to the business. With accurate long term cash forecasts, they are able to see the big picture view of cash and help the company take proactive measures to improve and mitigate any shortfall of cash.
Decrease Interest Expenses with Long-term Forecasts
With accurate long-term forecasts, Treasury has visibility on available cash that can be utilized to pay debt faster and responsibly while decreasing interest expenses.
2. Have Global Cash Visibility
By having global cash visibility, treasury can find opportunities for
- repatriation (bringing back cash home)
- paying down foreign currency-denominated debt.
3. Run Scenario Planning for Impacts of Cash Flow
Will it be a U-shaped recession or
L-shaped recession?
Run what-if scenarios to see the possible impacts of cash for a variety of scenarios and analyze how the recovery goes.
L-shaped recession?
Run what-if scenarios to see the possible impacts of cash for a variety of scenarios and analyze how the recovery goes.
4. Estimate Available Cash with Continued Variance Analysis
It is important to understand the likely accuracy of forecast considering its past performance. Without doing variance analysis it is difficult to estimate if the forecasts are accurate or not and how far into the future they are accurate and to what degree.
Continued variance analysis helps determine the degree of confidence needed for long term forecasts. And based on that confidence level as well as possible variance, treasury teams can make the right decision as to how much cash is available to leverage.
Continued variance analysis helps determine the degree of confidence needed for long term forecasts. And based on that confidence level as well as possible variance, treasury teams can make the right decision as to how much cash is available to leverage.
