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Forecast Cash Flow From Receivables Using AI and ML

How to Forecast Cash Flow from Receivables using Artificial Intelligence (AI) and Machine Learning (ML)


If Cash is King and the lifeblood of all businesses, why have we not perfected the art of cash flow forecasting? Treasury departments today most certainly have a need for better cash flow predictions and improved cash collections.

According to IDC’s COVID-19 Impact on IT Spending Survey, more than 40% of the businesses have added cash management tools to optimize cash flow and working capital. IDC believes organizations with intelligent flexible AR management solutions that allow for visibility and agility will find themselves better suited to withstand current market conditions and able to find pockets of growth.

cash flow forecasting

The IDC Technology Spotlight 2021:
Uncertainty Places Accounts Receivable (AR)
on the Front Line for CFOs

“Accounts Receivable is among the largest and most liquid assets on the books of most companies. A properly managed accounts receivable portfolio can expedite cash flow and support corporate cash requirements.” – Inc..

The top reasons for not managing AR properly include:

  • Receivables data being located and scattered in multiple, disparate financial systems
  • Using the “best guess” or “my experience tells me” methodology
  • Inadequate cash flow forecasting and cash flow analytic tools, and
  • Outdated technology and tools

In a recent webinar hosted by FCIB we conducted a survey of credit professionals, when asked how many were still using Excel to forecast their cash collections, an overwhelming 90% answered Yes.

So, What’s the Problem?

The management of liquidity and risk is always near the top of the treasury strategies. To maintain constant awareness of the financial health of their enterprise treasurers are required to control liquidity and accept a certain level of. The ebb and flow of businesses makes identifying useful patterns and trends difficult. Seasonality of cash collections or unpredictable acquisitions adds to the difficulty in cash flow forecasting/cash flow predictions.

Historically the process is long and labor intensive. Today’s “do more with less” staffing methodology does not allow us enough time to fine tune the process. We often lack systematic ways of identifying the disputes and deductions that contribute to slow or non-paying customers.

Digital Receivables

Digital Receivables:
Keeping the Customer and Maximizing Cash Flow

Achieving Forecasting Nirvana

An article on the Treasury Insights website tells us that “Those that take a modern approach to cash flow prediction must account for volatility, manage costs and growth, identify business drivers, and facilitate the cash flow process. This approach may be assisted by investments in technology such as Business Analytics…” To manage cash forecasts we need accurate, up to date information.

Access to current and historic information is pivotal in anticipating the payment patterns of the future. Predictive Analytics provides this exact solution. The successful treasury department of tomorrow will employ this high ROI, low cost approach to honing their cash flow forecasting.

A Modern Approach Using AI & ML

Analytics helps us to discover meaningful patterns in financial data. We harness the power of data from multiple sources, both recent and past to see a picture of actual results and future predictions. The real power comes in bringing together data (e.g. big data and data warehouse) into one centralized repository.

Think about deriving cash flow forecasts from all of your financial systems regardless of time, location or source. Analytics derive their outcomes from extensive mathematical modeling and computations utilizing advanced artificial intelligence (AI) and machine learning (ML). They provide us with sophisticated visualizations that open up a world which allows us to understand cash flow patterns and generate accurate cash predictions.

Today’s spreadsheet cash forecasts only provide single-source, two dimensional tabular reports on current period information. Analytics opens up a world that allows us to see in multi-dimensions with 360⁰ views into current, historic and future business outcomes.

According to Ernst and Young Advisory Services group “Analytics is not a ‘nice to have,’ but a ‘must have’.” Analytics allow the modern treasury department to take a proactive and thoughtful approach to their cash forecast model. The accuracy and efficiency of cash flow forecasts can be greatly improved using technological advancements such as machine learning (ML) and artificial intelligence (AI).

Make accurate cash flow forecasts using AI

Make accurate
cash flow forecasts using AI

Emagia’s AI-driven Cash Flow Forecasting solution automates cash forecasting by analyzing huge volumes of data, enabling accurate cash predictions as frequently as needed while reducing the manual efforts by over 90%. At a time when predicting cash flow is gaining more prominence in the wake of staff reduction, delayed payments and increased borrowing, Emagia’s solution simplifies the arduous task of forecasting by telling you how much cash your business is going to generate and how much you need, with intelligent analytics.


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