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CMLI Study Confirms Automation Streamlines Cash Forecasting

The more automated your organization’s treasury operations, the less likely it is to struggle with its cash forecasting.

That’s one of the key findings of a survey of finance leaders from organizations with $100 million or more in annual revenues conducted by the Cash Management Leadership Institute (CMLI), a provider of must-have content to treasury and cash management leaders.

Among finance leaders from organizations that haven’t automated their treasury operations, nearly one in three identified cash forecasting as a challenge. In comparison, less than one in five finance leaders from organizations that have automated their treasury operations find cash forecasting to be a challenge.

In fact, cash flow is the biggest issue for non-automated finance teams.

Source: CMLI Cash Forecasting research

How manual processes impede cash forecasting

Accurate cash forecasting is the lifeblood of any organization. It empowers you to make informed decisions about everything from investments and borrowing to managing day-to-day operations.

But for many businesses, manual treasury processes are throwing a wrench into cash forecasting:

  • Slow data gathering.  Pulling down CSV files and downloading data from bank statements, invoices and other sources is tedious and time-consuming.  Cash managers can waste hours toggling between systems and portals, re-keying and compiling data, and integrating data into larger spreadsheets.  Worse, cash managers can never be sure that information is up to date.
  • Inefficiency.  In a manual cash forecasting environment, cash managers waste lots of time collecting, manipulating, and distributing data, instead of focusing on strategic analysis. 
  • Errors.  Mistakes are inevitable wherever humans are involved.  Errors from manual data entry, data mapping issues, missing information, and data that isn’t submitted in time can result in costly mistakes.  A single typo or transposed number can skew an entire forecast.  
  • Poor visibility.  Manual processes can make a cash manager feel like they are flying blind.  Key information is not captured, captured data is inaccurate, information is not timely, and data is poorly organized.  Spreadsheets – the cash forecasting tool of choice in many treasury operations – can become corrupted or may provide an incomplete picture of an organization’s cash position.  And cash managers may waste lots of time on back-and-forth phone calls and emails chasing down and clarifying information.  As a result, finance leaders don’t have all the variables they need to make informed decisions about the organization’s cash position.
  • No agility.  If there’s one lesson that cash managers have learned over the past several years, it’s that they need to be ready for anything.  But manual approaches to cash forecasting make it hard for cash managers to react to unexpected events or seize new opportunities.  Cash forecasting data is not easy to access or share.  Information cannot be sorted in the way that makes the most sense for a cash manager.  And workflows are rigid and not easy to adapt.

It’s no wonder that manual processes can lead to poor decision-making about things like liquidity, borrowing, and investments.  That’s why more organizations are automating their cash forecasting.

Benefits of automated cash forecasting

Automating cash forecasting unlocks tremendous benefits for cash managers.

  • Efficiency.  Automated cash forecasting solutions aggregate data from enterprise systems, bank accounts, spreadsheets, and other sources without the need for manual keying or manipulation.  Recurring forecasts can be created as simply as entering a calendar event.  By automating manual and time-consuming cash forecasting tasks, treasury professionals have more time to focus on interpreting forecasts, identifying trends, and developing strategies.    
  • Visibility.  Automation aggregates data from multiple sources, providing a single source of truth.  Some solutions can interact with enterprise systems and spreadsheets, to ensure that information is up to date.  Dashboards graphically display key insights.  And authorized users can instantly access cash forecasting data at any time, from any location, using any device. 
  • Agility.  Automation provides instant visibility into historical cash flow trends, seasonal fluctuations, external factors, and other dynamics that may impact a cash manager’s decisions about borrowing, investments, and resource allocation.  When new cash flow data becomes available, forecasts can be automatically updated, providing a clear picture of an organization’s financial standing at any given moment.  Graphical dashboards also enable cash managers to instantly identify cash flow shortfalls or excess cash that can be invested. 

These are some of the reasons that most organizations that have automated their cash forecasting with artificial intelligence (AI)-powered tools are satisfied with the technology, per CMLI’s study.

Cash forecasting means more in uncertain economic times like these.  By automating cash forecasting, organizations can improve efficiency and get a clearer picture of their financial health. 

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