Finance teams of global enterprises might feel as though they are stuck in a stormy surf, facing wave after giant wave. Steering an enterprise through a pandemic, inflation, rising interest rates, and the uncertainties and disruptions of war with global sanctions presents serious challenges. Some finance leaders might be excused if they pine for the slow-growth years of a decade ago.
The pandemic drove a renewed focus on cash flow if finance departments needed any reminder. Ensuring sufficient liquidity became “job one” for many. Unfortunately, subsequent events have not allowed relaxation.
Cash forecasts are vital to cash management and decision-making. But timely cash forecasting remains challenging, especially for global enterprises with complex operations across several countries or regions with cash flows in multiple currencies.
The Problem of Forecasting Cash Flow
The primary difficulty is time. Most organizations still rely on manual or imperfectly automated processes to assemble and roll up the requisite data, which takes too long. By the time they have gathered and prepared to analyze the data, it is no longer current.
Forecasting is especially difficult for global entities with operations across multiple countries and regions, dealing in various currencies and operating numerous ERP systems. There is no hope of a timely enterprise-wide view of receivables and payables status with such complexity, never mind an accurate forecast.
However, it is just at this point that combined technologies support the kind of automation that enterprises need. The increase in computational power and data storage and management capacities have broadened the capabilities and reach of technology. Specific technologies working in concert are enabling automation breakthroughs.
Regarding cash flow forecasting in complex global enterprises, tools are available to support a single view of the enterprises’ AR position, convert all the requisite data to a structured format suitable for analysis, and apply analytics and machine learning to explore a greater depth of history and provide faster and more accurate forecasts.
The Global Treasurer says, “The advancements of new technology – particularly with the artificial intelligence space – could mean cash forecasting accuracy is no longer an issue. The use of AI and ML has proven to both increase forecast accuracy – through the removal of human biases, and reduce the time taken to produce forecasts than manual processes.”
Elements in Cash Forecasting Automation
Through automation, a global enterprise can capture data in real-time and develop necessary short-term cash flow forecasts with greater (and improving) accuracy through applied analytics. How does this work for a complex global organization?
It begins with a platform that employs data lake technology to bring all the enterprise’s data together in one place. Intelligent document processing technology extracts and converts data into a usable format. AI analytics speed analysis while machine learning sharpens accuracy over time.
These solutions are already providing faster and more accurate cash forecasting for several global organizations, aggregating data from disparate ERPs, translating languages and converting currencies, and analyzing and forecasting cash inflows. As a result, their treasury teams have a clearer picture of liquidity and make data-driven cash management decisions.
To learn about Emagia’s Cash Flow Forecasting application, contact us.