Treasury focuses on liquidity forecasting and planning, releasing trapped working capital, and making decisions on managing finances and risks. Covid-19 has exacerbated the importance of forecasting with fluctuating revenues and tightened budgets.
However, most times the forecast is not accurate or timely enough for taking prudent decisions. There could be multiple challenges that stem while forecasting cash.
These are the most common root causes for challenges in cash forecasting:
To overcome the challenges, it is important to understand what drivers are under the treasury’s control and which ones are not.
Market fluctuations are beyond anyone’s control but the accuracy in forecasting is something that can be governed. If data is updated frequently and seasonality is tuned into the forecasts, it gives a realistic picture of accounts receivable and accounts payable, despite them being highly unpredictable.
AI-based cash flow forecasting provides better oversight in cash positions by:
Enriched visibility across all cash flow categories such as A/R, A/P, and CAPEX enhances forecast accuracy and also provides real-time information to drive key decisions efficiently.
Excel-based cash flow forecasting involves significant manual work, therefore automating most of the processes that don’t need human involvement alleviates much of this burden and saves a lot of time to focus on high-value activities like analysis and decision making. These are some of the key benefits that Artificial Intelligence provides in the cash forecasting process:
AI helps organizations to prioritize their tasks better and improves forecasting accuracy. This helps the treasury team stay abreast of changing environments and macroeconomic fluctuations that might go unnoticed otherwise.
In the new normal, CFO’s expectations are growing rapidly and the treasury needs to step up to provide strategic value. This can only be possible if they optimize their existing processes with technology.
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.