Economic instability isn’t just a finance headline. It’s a day-to-day reality for treasury professionals tasked with ensuring liquidity, managing risk, and supporting business strategy. When interest rates swing, inflation lingers, supply chains wobble, or consumer demand shifts, cash flow becomes volatile – and poor cash forecasting can send even healthy businesses into crisis mode.
That’s why now, more than ever, treasurers must rethink how they forecast cash.
If your organization still relies on last year’s assumptions, quarterly planning cycles, or spreadsheet-based models to forecast cash, you could be flying blind. And if action is needed – cutting expenses, delaying investments, adjusting borrowing – you want to be the one who sounded the alarm early, not the one left scrambling. This article looks at cash forecasting challenges, why it matters more during turbulent times, and what best-in-class treasury teams are doing to forecast cash with confidence.
How Most Organizations Forecast Cash
Despite the critical nature of forecasting, many treasurers still rely on outdated or ad hoc processes:
- Spreadsheets are still the dominant tool for cash forecasting. They’re familiar, flexible – and full of risk. Manual entry, version control issues, and limited automation all contribute to inaccuracies and delays. As businesses grow in complexity, spreadsheets simply can’t keep up with the demands of dynamic, multi-entity cash management. What may seem manageable today can quickly become a liability when the economy shifts.
- Infrequent planning cycles create blind spots during periods of volatility. In uncertain environments, a forecast that’s a month old is stale. Economic disruptions don’t wait for the next planning meeting, which means you’re always reacting instead of preparing. This leaves decision-makers flying blind when fast, informed responses are needed most.
- Disconnected data sources make it hard to get a holistic view. Treasury teams often juggle reports from multiple ERPs, bank portals, business units, and departments – none of which speak the same language. Without real-time consolidation, forecasts are delayed and based on incomplete data. That leads to misinformed decisions and missed opportunities.
- Limited collaboration with other stakeholders means key cash forecasting inputs get overlooked. Sales, procurement, operations, and finance all impact cash – but they’re often left out of the cash forecasting conversation. This results in cash flow models that don’t reflect upcoming changes in demand, expenses, or project timing. Forecasting cash flows in a silo is a recipe for surprises – and not the good kind.
When you combine outdated tools, stale data, fragmented systems, and siloed thinking, it’s no wonder so many cash forecasts fall short – especially when the stakes are highest.
How Cash Forecasting Helps You Navigate Turbulent Economic Times
When economic conditions shift rapidly, cash forecasting is a tool for navigating uncertainty.
- Improved visibility = better decision-making. Up-to-date forecasts give leaders the information they need to adjust budgets, negotiate with suppliers, optimize borrowing, or defer non-essential spending. When leadership has confidence in cash projections, they’re able to act decisively instead of hesitating. This clarity can mean the difference between gaining a competitive edge and missing the moment.
- Early warnings = faster response. If cash shortfalls are looming, treasury can act early – rather than reacting late. Early visibility gives organizations time to line up financing, renegotiate contracts, or cut back discretionary spending. It also strengthens your position with lenders and investors, who want to see strong risk awareness.
- Scenario modeling = proactive planning. What if interest rates climb by another 100 basis points? What if a key customer delays payment? Cash forecasting lets treasury and finance leaders test scenarios and prepare for what’s next. This kind of stress testing ensures your organization won’t be caught flat-footed, no matter how the market moves.
- Stakeholder alignment = coordinated action. Forecasting opens the door for proactive conversations with business partners. When treasurers share forecasts early, they put actions on the radar before decisions need to be made. This fosters stronger cross-functional collaboration and ensures everyone is rowing in the same direction during uncertain times.
In turbulent times, cash forecasting isn’t just a treasury and finance tool – it’s an organization’s early warning system, strategy compass, and coordination engine all rolled into one.
Best Practices for Forecasting Cash in Turbulent Times
To deliver the insights that leadership needs during periods of volatility, treasury and finance leaders should revisit their forecasting approach – and upgrade it in the following ways:
- Revisit Your Assumptions
- Turbulent times demand fresh thinking. What held true six months ago may no longer apply. Recalibrating assumptions about sales cycles, supplier payment terms, and market conditions is critical to staying grounded. Regularly pressure-testing your assumptions ensures your forecast reflects what’s really happening – not what you wish were true.
- Shorten the Forecasting Cycle
- Move from quarterly or monthly forecasting to weekly – or even daily – updates. A shorter cycle helps capture shifts in cash flow faster and enables more timely decisions. This gives treasury and finance leaders the ability to respond to changing variables as they happen, not after the fact. In turbulent times, yesterday’s data may already be too old to act on.
- Build a Range of Scenarios
- Don’t rely on a single projection. Create best-case, worst-case, and most-likely scenarios. This allows you to identify trigger points for action and evaluate contingency plans under different market realities. Leaders who have rehearsed multiple outcomes are more confident and more credible.
- Centralize and Automate Data Collection
- Where possible, automate data feeds from banks, ERPs, and other systems to reduce manual entry and improve data integrity. Integration helps deliver a more comprehensive and accurate cash forecast. Automation also frees treasury staff to focus on analysis, not data wrangling. When you spend less time assembling data, you spend more time delivering insight.
- Collaborate Across the Organization
- Cash forecasting isn’t just a treasury function – it’s a team sport. Engage departments like finance, sales, procurement, and operations to ensure their insights and changes are reflected in your forecasts. This not only improves accuracy but also strengthens internal relationships and shared ownership. The more informed your model is, the more trusted it becomes.
- Communicate Early and Often
- Forecasting should spark conversations. If your forecast reveals potential trouble – or opportunity – start talking about it early. The earlier stakeholders are looped in, the more time they must evaluate options and take meaningful action. And in the boardroom, bringing issues to the table before they erupt builds confidence in treasury’s leadership.
In a volatile economy, the organizations that forecast best are the ones that rethink assumptions, move fast, plan for the unexpected, and bring everyone to the table before it’s too late.
Get Ahead of What’s Coming
Disruption and turbulent economic times aren’t just a test of resilience – they’re a test of readiness. And readiness starts with a strong cash forecast. Treasury and finance leaders who proactively update their assumptions, shorten their planning cycles, and get others talking about the cash outlook are the ones who will lead their organizations through uncertainty – and avoid getting blindsided.
