How Cash Forecasting Automation Can Help My Company Save Time and Effort

January 24, 2022

Cash flow is the lifeline of a business. Aside from the obvious need for revenue to make a profit, businesses also need cash to make payroll, cover utility bills and fund expansion. However, manually managing cash flow is a time-consuming process that can eat away at profits with inefficiencies. Automating the cash forecasting process can save your business time and money while providing the flexibility to make timely decisions when opportunities arise.

What Is Cash Forecasting Automation?

Cash forecasting is the process of estimating the inflow of revenue a business can expect during a specific period. It also matches this expected revenue against existing expenses.

When done manually, these are some of the many components of the cash forecasting process:

Reviewing sales data and inventory turnover
Adjusting for seasonal performance
Mapping the cash conversion cycle
Estimating variable overhead costs, such as payroll and utilities
Subtracting payments due in that period

Automated cash flow forecasting refers to leveraging AI to simplify some or all the steps involved in forecasting automation. The ideal cash flow forecasting solution automates the entire process so managers can make quick forecasts and see adjustments in real-time.

How Can an Automated Cash Forecasting Solution Help Accounting and Collections Teams?

The old mantra of not fixing something unless it’s broken saves money in the short run. In the long run, it could cost the business in errors or reduced efficiencies.

Consider these benefits of improving processes with automation:

1. Fewer Errors

No matter how brilliant your accounting team is, completing tasks manually increases the risk of human error. Bots can complete the same AR cash forecasting tasks repeatedly without fatigue, so automation reduces errors. This generates accurate data, which leads to more accurate and realistic cash forecasts based on long-term business data and trends.

2. Improved Productivity

Repetitive and boring manual tasks tend to cause fatigue. Asking employees to spend a great deal of time on tasks like these negatively impacts job satisfaction. When employees can eliminate manual tasks with a click of a button, it frees them to work on more challenging parts of their jobs that require creativity and intelligence.

3. Increased Speed

Most companies complete cash forecasting for specific periods, such as quarterly or at the end of the month. But what happens if you need a cash forecasting report completed immediately to determine whether you will have the means to cover an unexpected liability or emergency expense? Automated cash flow happens almost instantly, providing you with the information you need at a moment’s notice.

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What Are Cash Forecasting Best Practices?

Cash flow improvement requires studying the best practices and applying the ones that might deliver the best results for your business. Provided your business isn’t suffering from an emergency cash shortage, consider applying these in stages. This allows you to better determine which specific best practices bring you the best results.

1. Talk To Your Team

Before you can improve any business function, it’s important to talk to the people carrying out these functions. These professionals have the inside knowledge you need to make the best possible decisions about what solutions to consider and how to apply them. Consulting with workers also increases buy-in.

2. Integrate Your Systems

One of the greatest sources of inefficiencies across organizations is the existence of data silos. Different software, systems and departments have access to data that overlaps, but they might not share it. Integrating your systems resolves this, which also improves the accuracy of data. An example involves syncing your enterprise resource planning systems with your AR software.

3. Ditch the Spreadsheets

Organizations commonly use spreadsheets to complete the forecasting process. This involves copious amounts of data and complex formulas. Spreadsheets are still crucial for many business functions, but they are inefficient for forecasting cash flow. They leave far too much room for error.

Treasurers know this and can sometimes begin to doubt the accuracy of forecasting information provided. This compels them to review and even audit the report to ensure accuracy. This adds even more time and inefficiencies to the process.

To make matters worse, accounting professionals often spend 80% of their time just creating and entering the data in spreadsheets. This leaves very little time to analyze the data and arrive at accurate results. Automation solves these and other problems because it can pull data directly from your ERPs or banking systems.

Why Consider Gaviti for Cash Flow Automation?

Our developers at Gaviti have spent years creating and perfecting our AR software. Our clients rely on our technology to eliminate tedious manual tasks and improve their efforts at collecting invoice payments. We make it easy and affordable to leverage AI to take your cash flow dollar values and process to the next level. Why take our word for it?

Book your free demo to try it for yourself.