
Challenges faced by a CFO
The following are the top four challenges that CFOs face:
Companies that consider the CFO role as more about reporting than planning will be at a competitive disadvantage in the near future. To make informed decisions, finance executives must ensure that their management teams have access to timely data.
CFOs, particularly in small and medium-sized businesses, wear many hats. In addition to their traditional CFO duties, they are examining cyber security threats, managing systems, and data integration, filling skill gaps, and evaluating better technologies and software. Robotic Process Automation is used to automate data aggregation from multiple sources. It eliminates human errors and helps treasury focus on high-value tasks like decision-making. It also gathers cash data into a single dashboard, allowing it to simply eliminate manual operations and start monitoring, analyzing, and automating cash reporting, forecasting, and workflows. Technologies such as AI forecasting software have more to offer to the CFOs.
Global markets remain turbulent, and accounting for unexpected uncertainty has become the norm. So, CFOs should embrace robust software for cash flow forecasting to become strategic advisors in their organization. The following are some of the reasons why using the right AI forecasting software can help the business grow:
Accurate modeling
Technical expertise, as well as the bandwidth and tools necessary for proper modeling, are frequently lacking among treasury employees. Because some cash flow categories demand distinct models and data, it’s important to look at how data is incorporated into the models. Heuristic models, for example, are used for Payroll, Expenses, Taxes, CAPEX, Investment & Debt, whereas AI models are utilized for forecasting A/R and A/P. With the help of centralized software, forecasts can be created accurately with suitable models and rolled up from regional to a global level for various entities, company codes, categories, and subcategories.
Capture customer-centric variables
It is critical to collect customer data in order to determine trends and patterns in payment behavior. Spreadsheets have a restriction on the number of variables that can be entered. Some accounts’ behavior can be tracked using the ADP technique or weighted average, however, others with discount rates are more difficult to track.
Benefits of capturing customer-centric variables
Improve scenario analysis
An AI cash flow forecasting software assists treasury in improving scenario analysis to prevent cash shortages since it provides the foresight to track current and potential cash shortages with drill-down capability using dashboards.
Moreover, the software also helps CFOs learn when and where they’ll have surplus cash in the bank, as well as seeing when the surplus will occur. Hence, they can better plan for investment and expansion activities.
Benefits of accurate scenario analysis
Improved analysis and reporting
AI forecasting software can create high-quality reports in real-time with drill-down capabilities. It gives a fair and consistent examination of a company’s financial health by determining cash deficits or surpluses by tracking cash flows and planning accordingly for investment and borrowing.
Benefits with improved analysis and timely reporting
Accurate and frequent variance analysis
AI forecasting software uses closed-loop feedback to reduce the variance over time. A feedback loop allows the AI model’s projected outputs to be reused to teach new models.
Benefits of accurate and frequent variance analysis
Get in touch with our solution experts to know more about the benefits of a cash forecasting solution for the CFOs.
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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.