The benefits of automated cash flow forecasting
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24 Jul, 2024
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3 min read
Cash (flow) is king; there's no denying it. However, it could go from being your most significant asset to your Achilles heel if not appropriately managed. This is where accurate (and efficient) cash flow forecasting becomes paramount, potentially distinguishing between success and failure.What is cash flow forecasting?
Cash flow forecasting involves estimating the cash flow into and out of your business within a specific period. Without successful forecasting, it's nearly impossible to run a healthy business. Why? Simply put, you need cash to come in at a steady enough flow to manage your accounts payable and investments successfully. Additionally, many businesses are seasonal, meaning that it's vital to set cash aside for the slower months to balance the flow between accounts receivable and accounts payable. That sounds great; however, it's more complex than it appears, especially when relying solely on labour-intensive and time-consuming manual processes that are prone to errors. In fact, as recently as five years ago, 70% of small businesses surveyed still crunch numbers through traditional spreadsheet reporting.
What you need is accurate, easy, and real-time cash flow forecasting. This will allow you to keep a finger on the pulse of your business and ensure a consistent and predictable cash flow, helping you make better-informed decisions about your financial future.
Cue automated cash flow forecasting.
The benefits of automated cash flow forecasting
Real-time insights and faster decision-making
In an industry where time is of the essence, automated forecasting helps AR and AP teams speed up the entire payment process by leveraging real-time visibility into future cash positions. By tapping into these insights, businesses can enable quicker strategic decision-making based on the most up-to-date and reliable information, a critical advantage in a dynamic financial landscape.
Improved efficiency and productivity
Your team is your most valuable asset; however, they can only add as much value to your business as is relevant to their capacity. Automated cash flow forecasting frees up your team to focus on more strategic-driven tasks. A recent survey highlighted that finance teams spend up to 5,000 hours per year on spreadsheets, 792 of which are spent generating cash flow forecasts. Automated cash forecasting can help teams save those 792 hours and focus on strategic decision-making.
Use cash flow forecasts to identify trends
There's a rhythm to almost everything in finance, and if you can't feel it, you're most likely slightly (or significantly) out of sync. Automated cash flow forecasting helps businesses adapt by proactively identifying and anticipating financial trends. By doing so, any change in income and expenses should prompt further management interrogation. For example, if sales are higher or lower than expected, you'll want to ask specific questions to figure out why:
This kind of active business management gives you the power to ask the right questions and ultimately make the right decisions. It's also important to note that it's not just about having the data but about knowing what to do with it. This is where the true power of automated cash flow forecasting lies, putting you in control of your business's financial future.
System1A's cash flow calendar
Not sure where to start? We've got you covered! System1A's cash flow calendar performs automated forecasts based on past client payment behaviours as well as incorporating clients' communicated payment commitments directly into the cashflow calendar. As a result, you can enjoy more accurate cash flow forecasts that are completed automatically and updated as new information is received.
It's time to take the next step.
Consider implementing this powerful tool in your business to enjoy more accurate cash flow forecasts and make better-informed decisions about your financial future.
Cash flow forecasting involves estimating the cash flow into and out of your business within a specific period. Without successful forecasting, it's nearly impossible to run a healthy business. Why? Simply put, you need cash to come in at a steady enough flow to manage your accounts payable and investments successfully. Additionally, many businesses are seasonal, meaning that it's vital to set cash aside for the slower months to balance the flow between accounts receivable and accounts payable. That sounds great; however, it's more complex than it appears, especially when relying solely on labour-intensive and time-consuming manual processes that are prone to errors. In fact, as recently as five years ago, 70% of small businesses surveyed still crunch numbers through traditional spreadsheet reporting.
What you need is accurate, easy, and real-time cash flow forecasting. This will allow you to keep a finger on the pulse of your business and ensure a consistent and predictable cash flow, helping you make better-informed decisions about your financial future.
Cue automated cash flow forecasting.
The benefits of automated cash flow forecasting
Real-time insights and faster decision-making
In an industry where time is of the essence, automated forecasting helps AR and AP teams speed up the entire payment process by leveraging real-time visibility into future cash positions. By tapping into these insights, businesses can enable quicker strategic decision-making based on the most up-to-date and reliable information, a critical advantage in a dynamic financial landscape.
Improved efficiency and productivity
Your team is your most valuable asset; however, they can only add as much value to your business as is relevant to their capacity. Automated cash flow forecasting frees up your team to focus on more strategic-driven tasks. A recent survey highlighted that finance teams spend up to 5,000 hours per year on spreadsheets, 792 of which are spent generating cash flow forecasts. Automated cash forecasting can help teams save those 792 hours and focus on strategic decision-making.
Use cash flow forecasts to identify trends
There's a rhythm to almost everything in finance, and if you can't feel it, you're most likely slightly (or significantly) out of sync. Automated cash flow forecasting helps businesses adapt by proactively identifying and anticipating financial trends. By doing so, any change in income and expenses should prompt further management interrogation. For example, if sales are higher or lower than expected, you'll want to ask specific questions to figure out why:
- Are your competitors changing the way they do business?
- Are new competitors entering the market of which you're unaware?
- Have certain areas of your services dropped in quality, and are you no longer meeting client expectations?
This kind of active business management gives you the power to ask the right questions and ultimately make the right decisions. It's also important to note that it's not just about having the data but about knowing what to do with it. This is where the true power of automated cash flow forecasting lies, putting you in control of your business's financial future.
System1A's cash flow calendar
Not sure where to start? We've got you covered! System1A's cash flow calendar performs automated forecasts based on past client payment behaviours as well as incorporating clients' communicated payment commitments directly into the cashflow calendar. As a result, you can enjoy more accurate cash flow forecasts that are completed automatically and updated as new information is received.
It's time to take the next step.
Consider implementing this powerful tool in your business to enjoy more accurate cash flow forecasts and make better-informed decisions about your financial future.
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