Top Cash Forecasting Tools for Mid-Sized Enterprise Businesses

Research by CBI Insights highlighted that 30% of businesses fall flat on cash while 60% of businesses don’t have proper insights on their finance or treasury workflow..

It is essential to master choosing appropriate tools for predicting cash flows for identifying a crisis in the future since it helps in making prudent decisions for limiting risks and identifying probable opportunities. To achieve that, these steps should be followed:

1. Monitoring the cash flows :- Cash inflows include profits or incomes. Outgoing cash includes expenses, payroll, and debt. The HighRadius cash forecasting software automatically rolls up forecasts for various business teams, units, and regions to help you control your cash flows.

2. Integrating with data sources:- Centralized systems like Cloud helps in seamlessly pulling the accounting data via ERP, API, or SFTP and provides the IT team to perform more value-added work than manual extraction of data.

3. Choosing a model for forecasting:- According to the purpose of the forecast for short-term or long-term, the models would identify trends in sales projections, expenses, determine patterns in customer payment behavior. HighRadius informs you where to use AI-based models or heuristic models. Cash flows like Payroll, CAPEX, Investments need heuristic models, whereas AI models are used for AR and AP due to their high variability.

4. Tracking the variance in forecasts:- Lastly, the variance is monitored and the areas facing high variances are noted. The KPIs are tracked and updated accordingly, and informed decisions are made.

But preparing a forecast with spreadsheets and then collaborating with different teams to make cohesive plans is challenging. Thus automated tools can support you through the process and help in saving time.

5 Tips to take your cash forecasting to the next level

Here are some best practices to choose the most suitable cash forecasting software:

• Determine your cash forecasting purpose. If you need to track your day-to-day cash positions or prevent overborrowing, then you should forecast daily, but if your priority is an investment or business expansion/M&As, then you can forecast either weekly or monthly depending on your needs.
• Ask yourself why you would need to upgrade to better technology and learn how it can help you with forecasting, what are the areas where it will provide benefits, and if it can save ample time for your team to make strategic decisions.
• Research for a robust solution that is capable of performing end-to-end cash forecasting processes, performs accurate forecasts and offers granular visibility.
• Evaluate if the solution will fit seamlessly with your system and if it has enough flexibility and scalability or not, to align with your KPIs even if they change in the future.
• Analyze how quickly you can recover your investments from the chosen tool/technology and if the technology would reduce the variance in forecasts vs actuals, hence increasing your gross savings.

Forecasting software for mid-sized businesses should allow easier integration with data sources. It must predict balance by adding variability in receivables, deliver factual and reliable analytics and reports, and assist in minimizing risks, and increase workforce agility.