Effective ways for Treasury to optimize liquidity through accurate Accounts Receivable forecasting
Of the aforementioned factors that hamper the accuracy of an A/R cash forecast, Treasurers have limited control over the macro-economic factors & market dynamics.
The other factors such as inconsistent customer behavior, lack of visibility into A/R cash flow data & tool based limitations could be addressed if treasurers enforce the following methodologies into their forecasting process:
Most cash forecasts are 60-70% accurate, and this limited range of accuracy is attributed to inherent errors within excel and manual data gathering processes
However, regular revision of cash forecasts helps the treasurer change the assumptions regularly, re-look at the A/R data and tweak the forecast models for better forecast accuracy vis-a-vis reduction invariance.
To drive better visibility into A/R cash flows, Treasury teams should:
Gain Visibility Into All Cashflows
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