A survey conducted with corporate treasurers last year by Treasury Strategies Inc. found that improved forecasting capabilities were the top priority for 2020 and were up from second place in 2019 and third place in 2018.
COVID-19 has affected enterprises’ capability to predict their cash flows due to unpredictability. Every enterprise treasurer desires to have a reasonably high cash forecasting accuracy but getting there is difficult due to the operational challenges treasurers face in their daily life.
Challenges faced by enterprise treasurers
The demand for accurate and timely forecasting has increased with the need to maintain liquidity amid market volatility and risk exposures. Treasurers can lessen the effort spent on forecasting cash by incorporating automation for real-time data-gathering capabilities from multiple data sources across various entities, banks, and currencies. The right treasury technology can greatly enhance the ability to update forecasts, in addition to cash forecasting accuracy for the short-term and long-term.
The goal of cash forecasting requires it to be aligned with the company’s cash position and its priorities.
Additionally, start with a base rate through the following ways:
Leverage AI and automation to transform the treasury functions and set it up for a long-term win. Treasures should consider digital transformation by leading enterprise value creation and improving overall implementation. Automating treasury functions will enable finance teams to spend more time on high-value tasks, like initiating insights, managing cash and expenses, and tracking investments.
Understand if the company’s present condition requires re-forecasting or constant variance analysis and determine the forecasting cadence. Variances are important for an organization’s key performance indicators (KPIs). Most enterprises perform standard variance analysis (spreadsheet-based), but they often do not have the accuracy that the automated cash forecasting system provides.
Benefits of re-forecasting and updating cash forecast regularly or weekly:
When multiple scenarios are analyzed, it leads to better visualization of the impact of specific future conditions. This helps enterprises to revise their strategies for overcoming potential risks to their finances. Thus, treasurers should stress test what-if scenarios and incorporate them in forecasts to analyze how their cash balances would look like in cases of those scenarios.
HighRadius cash forecasting solution can help enterprise treasury by providing the following features:
The need to improve cash flow forecasting has increased as enterprises try to mitigate the effect of rapidly altering financial conditions and make accurate and quick cash flow decisions. Schedule a demo with us to get your hands on the best-in-class cash flow forecasting to maintain healthy liquidity.
The HighRadius™ Treasury Management Applications consist of AI-powered Cash Forecasting Cloud and Cash Management Cloud designed to support treasury teams from companies of all sizes and industries. Delivered as SaaS, our solutions seamlessly integrate with multiple systems including ERPs, TMS, accounting systems, and banks using sFTP or API. They help treasuries around the world achieve end-to-end automation in their forecasting and cash management processes to deliver accurate and insightful results with lesser manual effort.