In a context of international or health uncertainty, cash flow is more than ever at the center of companies' concerns, which reinforces the attention paid to cash flow forecasts . An essential indicator of decision-making, the forecasting tool aims to estimate all of the cash receipts and disbursements of a company over a given period, in order to manage liquidity and investments, and to forecast the need for working capital and financing.
A true vector of a cash culture, cash flow forecasting is a strategic tool for the company. And yet, according to a study conducted by Gtreasury “ Cash forecasting & Visibility SurveyReport ” published on November 3, 2021, 48% of treasurers experience difficulty in developing their cash flow forecasts. Furthermore, according to this study, it would be three times more difficult to generate cash positions without TMS (treasury management system). Despite this observation, Excel spreadsheets remain by far the most used means of financial planning, even in the largest companies. How to explain this phenomenon ?
Created in 1985, the software published by Microsoft has undergone numerous changes which now give it remarkable functionalities. Easy to use, part of its power lies in the import and manipulation of data which allows you to design visually very successful reports. Finally, inexpensive, there are even many free templates on the internet for managing your cash flow.
And yet, these many advantages for calculating cash flow forecasts with Excel will never be able to hide its limitations: the recurring and permanent work of controlling the data retrieved, the asynchronous internal collaboration, the non-existent traceability, the impossible access in real time , relative reliability and the obligation to perfectly master Excel to detect sources of errors and avoid tedious configuration.
To overcome the limitations of these manual processes, and gain confidence, the digitalization and automation of cash flow forecasts are essential while giving treasurers flexibility allowing them to develop and update their forecasts. Today there are solutions that offer real satisfaction.
The first challenge facing the treasurer in terms of cash flow forecasts is that of collecting financial data. When are they available? How to recover them? How can I easily integrate them into my forecasting tool?
An effective TMS knows how to answer these questions and is able to collect all the data to take into account to develop an effective cash flow forecast: payments, financial transactions, transaction notices, manually designed cash flow budgets, etc. No more hassle finding information, delays in obtaining a file, entry errors or laborious format conversions! With an automation solution, all the data needed to develop your forecasts is gathered in one place, easily visible, accessible in real time and operational. Some software is flexible enough to allow you to refine your forecasts or modify them based on actual results or financial contingencies. You have the possibility of simulating forecasts according to several scenarios, of applying evolution hypotheses, and even of dragging your forecasts from a previous exercise.
It is not enough to aggregate a mass of financial data, you still need to know how to get the most out of it. To analyze forecasts, the automation and digitalization functions are often enriched with an automatic designer of customizable and easily shareable reports. These can be configured to evolve according to needs and contingencies and offer multiple axes of analysis and graphical views thanks to the Business Intelligence functions on which they rely.
In terms of cash flow forecasting, we are increasingly talking about Machine Learning on which Artificial Intelligence is based, which seems to have a bright future. If the use is nascent in the field, progress confirms that it will probably contribute to a big change for treasury teams, or at least for those who have moved to automation!
