Using automated cash forecasting to support the modern treasurer 

Treasurers can’t afford to rely on incomplete/subpar cash forecast reports in today’s fast-paced world. They require to go public with those reports with the board of directors, CFO, investors, and shareholders. They also need to execute investment/borrowing decisions proactively by governing their cash positions daily and understanding the implications of certain scenarios. Thus cash forecasting automation is essential to them.

Automated cash forecasting enables rapid data gathering and consolidation, accurate modeling, and improved accuracy and frequency of variance analysis. Hence, treasurers can have easy data access and granular visibility into the cash flow forecasts and build accurate long-term cash flow forecasts to avoid cash shortages or missed opportunities during cash surplus situations.

Cash forecasting automation helps the corporate treasurer to improve cash forecasting accuracy, perform variance analysis accurately, and understand the ‘what-if’ scenarios effectively, and execute informed decision-making due to the following reasons:

1. Increased forecast accuracy: As the data is extracted straight from the sources and updated regularly, the scope of errors reduces. Capturing customer-specific variables and external factors such as raw material price fluctuations increases accuracy. Moreover, the ‘closed feedback loop model’ in AI-based cash forecasting software compares the historical results to the current results and makes certain adjustments to the forecasts to build cash forecast accuracy.

2. Improved variance analysis: Due to the granular visibility into the cash flows and the drill-down capability, the treasurers can analyze the deviation between the forecasts and actuals and identify the variance drivers across multiple cash categories, regions, and durations. This helps in improving the forecasting efficiency and reducing the variance over time.

3. Accurate scenario analysis: Scenario analysis is improved by incorporating adjustments into the forecasts and analyzing the impact of each scenario on the cash flows. The ability to perform forecasts frequently also helps in capturing trends and patterns.

4. Informed decision-making: Due to real-time reporting, continuous data access, and accurate insights, treasurers can implement data-driven, confident and timely decisions for managing assets, improving funding, proactively handling risks, and improving overall corporate treasury management.

The treasurer does not need to spend more time on manual/clerical work by implementing automated cash forecasting software. The modern treasurer is regarded as a high-value employee who:

• Identifies opportunities for cost-cuttings
• Invests in business expansion or M&A at the right time
• Handles counterparty and FX risks strategically
• Improves business operations and increases productivity
• Sends real-time reports to the CFO
• Maintains relationships with the investors and the board of directors

Learn more on how AI-based cash forecasting helps the modern-day treasurer be a strategic decision-maker and analysis expert.