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The Truth about your Forecasting Process

What you’ll learn


  • Learn about the challenges in cash forecasting.
  • Understand why existing treasury systems need to be evolved.
  • Learn how AI can resolve cash forecasting challenges.

Challenges in cash forecasting: From the lens of treasury department

Despite the fact that CFOs and treasurers are increasingly focusing on cash forecasting, the vast majority of organizations still rely on spreadsheets for their forecasts instead of adopting cash forecasting software. This causes a decrease in accuracy in cash forecasts because of the challenges caused by the manual process.

Challenges due to manual cash forecasting

  • Excel-based processes are inefficient and prone to errors
  • Frequent variance analysis is difficult to perform
  • Collaboration across departments becomes difficult due to siloed operations
  • Tedious to gather data from different sources

How can different treasury personas benefit from accurate cash flow forecasting

An accurate cash forecast provides a reliable and comprehensive perspective of the organization’s capital situation and future planning at these different levels:

  • CFO level: An efficient cash forecast has a direct impact on many key performance indicators that CFOs and senior finance executives regularly assess such as:
    • Cost of funds to liquidity and solvency ratios
    • Cash flow and working capital management

    To improve key performance metrics and make high-quality decisions, every CFO and senior finance executive should ensure that treasury is ready with accurate, detailed, and timely forecasts.

  • Treasury level: A reliable and complete view of the evolution of the organization’s capital situation and future planning is provided by an accurate cash projection. Treasury can also organize and carry out effective hedging operations to reduce risk. A good cash flow forecasting strategy can increase treasury efficiencies while also reducing effort among global operations.
  • Credit and A/R manager level: Forecasting cash requirements and expected cash flow on a weekly, monthly, and annual basis provides a company with the skills it needs to make smarter business decisions and avoid problems before they develop. This enables credit and A/R managers to:
    • Efficiently manage debt by collecting faster
    • Plan for the use of excess cash
    • Anticipate cash flow problems before they occur

Evolving treasury software systems to meet the needs of treasury

Optimizing financial liquidity is crucial for a firm to make timely decisions; but spreadsheet-based cash forecasting leads to high turnaround time, which hinders the reporting process and decision-making process. Additionally, it also lowers the credibility of the organization.
Solutions for treasury are always evolving through better APIs, data visualization, data gathering, and cash forecasting. SaaS cash forecasting software is one emerging technology that is altering the functions of treasury.

The major benefits of using cash forecasting software are:

  • Real-time and continuous data availability
  • Reduction in manual entry and calculation errors
  • Improved strategic decision-making
  • Cost-savings associated with banking and foreign exchange

Leveraging AI to resolve cash forecasting challenges

Treasury’s expectations are changing as more firms recognize the power of data to drive business development and growth. Teams are learning to prioritize tasks such as scenario analysis and predictive analytics over data aggregation. AI-based cash forecasting software can automate data collection, seamlessly connect, give real-time insights into positions across banks, accounts, entities, and locations, and properly estimate cash flows.

Advantages of using AI cash forecasting software

  • Increased accuracy: Feedback loop model and frequent variance analysis increase cash forecasting accuracy. Accurate data increases confidence in borrowing, investing, and merger and acquisition activities.
  • Improved scenario analysis: Treasurers can capture ‘what-if’ scenarios by incorporating customer-specific variables and the ability to detect trends and patterns. This enables them to plan ahead of time and avoid any financial problems.
  • Cost and time savings: AI technologies can help save time and money by automating regular procedures and freeing up teams to focus on higher-value activities that will improve their contribution across the enterprise.
  • Greater ROI: With AI, you can get a better return on investment in the short and long term in the following ways:
    •  Decreased interest expense
    •  Increased investment income
    •  Freed-up resource bandwidth

Advantages of using automated cash forecasting software

Automated cash forecasting software enhances forecast accuracy by comparing previous and recent outcomes, finding flaws, and making continuous improvements. Real-time data visibility and accuracy in cash flow forecasting assist treasurers in proactively identifying and mitigating risks before they result in losses for the firm.

The following are the benefits of leveraging automated cash forecasting software:

  • Identifying and capturing customer-specific variables: Automated cash forecasting solution learns from data and improves over time. Because spreadsheets restrict the usage of numerous variables, certain nuances cannot be tracked manually. By supporting several customer and invoice-level data, AI runs a historical analysis and a regression analysis to understand the past trends connected with A/R and A/P and estimate customer-specific payment dates. This helps to improve accuracy in forecasting A/R and A/P.
  • Variance analysis over multiple horizons: AI enables variance analysis across a wide range of cash flows and time horizons. Treasury is able to drill down to deviations between forecasts and actuals. This helps them to understand the root causes of variance and use corrective measures to improve the accuracy of cash forecasts over time.
  • Using appropriate models for various cash flow categories: Depending on the complexity and unpredictability of a cash flow category, multiple models are utilized for it. Forecasting A/R, for example, requires the use of AI models, whereas categories like Payroll and CAPEX are forecasted using heuristic models.

Schedule a demo today to learn more about HighRadius cash forecasting solution and its features that can help different treasury professionals.

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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.