{"id":55,"date":"2020-08-05T12:07:24","date_gmt":"2020-08-05T12:07:24","guid":{"rendered":"https:\/\/www.emagia.com\/blog\/?p=55"},"modified":"2025-01-28T22:40:43","modified_gmt":"2025-01-29T04:40:43","slug":"how-to-forecast-cash-flow-from-receivables-using-ai-and-ml","status":"publish","type":"post","link":"https:\/\/www.emagia.com\/blog\/how-to-forecast-cash-flow-from-receivables-using-ai-and-ml\/","title":{"rendered":"How to Forecast Cash Flow from Receivables using Artificial Intelligence (AI) and Machine Learning (ML)"},"content":{"rendered":"<p>If Cash is King and the lifeblood of all businesses, why have we not perfected the art of <strong>cash flow forecasting<\/strong>? Treasury departments today most certainly have a need for better cash flow predictions and improved cash collections.<\/p><div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-flat ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.emagia.com\/blog\/how-to-forecast-cash-flow-from-receivables-using-ai-and-ml\/#the-top-reasons-for-not-managing-ar-properly-include\" >The top reasons for not managing AR properly include:<\/a><\/li><li class='ez-toc-page-1'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.emagia.com\/blog\/how-to-forecast-cash-flow-from-receivables-using-ai-and-ml\/#so-whats-the-problem\" >So, What\u2019s the Problem?<\/a><\/li><li class='ez-toc-page-1'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.emagia.com\/blog\/how-to-forecast-cash-flow-from-receivables-using-ai-and-ml\/#achieving-forecasting-nirvana\" >Achieving Forecasting Nirvana<\/a><\/li><li class='ez-toc-page-1'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.emagia.com\/blog\/how-to-forecast-cash-flow-from-receivables-using-ai-and-ml\/#a-modern-approach-using-ai-ml\" >A Modern Approach Using AI &amp; ML<\/a><\/li><\/ul><\/nav><\/div>\n\n<p>According to IDC&#8217;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.<\/p>\n<p>\u201cAccounts Receivable is among the largest and most liquid assets on the books of most companies. A properly managed <a href=\"\/products\/enterprise-receivables-management-system\/\">accounts receivable<\/a> portfolio can expedite cash flow and support corporate cash requirements.\u201d \u2013 Inc..<\/p>\n<h3><span class=\"ez-toc-section\" id=\"the-top-reasons-for-not-managing-ar-properly-include\"><\/span><strong>The top reasons for not managing AR properly include:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>Receivables data being located and scattered in multiple, disparate financial systems<\/li>\n<li> Using the \u201cbest guess\u201d or \u201cmy experience tells me\u201d methodology<\/li>\n<li> Inadequate <strong>cash flow forecasting <\/strong>and <strong>cash flow analytic<\/strong> tools, and<\/li>\n<li> Outdated technology and tools<\/li>\n<\/ul>\n<p>In a recent webinar hosted by <a href=\"https:\/\/fcibglobal.com\/\" target=\"_blank\" rel=\"noopener nofollow\"><strong>FCIB<\/strong><\/a> we conducted a survey of <a href=\"\/products\/credit-risk-management\/\">credit<\/a> professionals, when asked how many were still using Excel to forecast their cash collections, an overwhelming 90% answered Yes.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"so-whats-the-problem\"><\/span><strong>So, What\u2019s the Problem?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>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 <strong>cash flow forecasting<\/strong>\/<strong>cash flow predictions<\/strong>.<\/p>\n<p>Historically the process is long and labor intensive. Today\u2019s \u201cdo more with less\u201d 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.<\/p>\n<p class=\"border text-center p-3 rounded border-primary mt-4 mb-4 bg-light\"><a class=\"text-decoration-none\" href=\"\/resources\/ebooks\/accelerate-cash-flow-and-reduce-costs-with-digital-payments\/\">Accelerate Cash Flow and Reduce Costs with Digital Payments. <strong class=\"text-decoration-none font-weight-bold\">Read eBook<\/strong><\/a><\/p>\n<h2><span class=\"ez-toc-section\" id=\"achieving-forecasting-nirvana\"><\/span><strong>Achieving Forecasting Nirvana<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>An article on the Treasury Insights website tells us that \u201cThose 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\u2026\u201d To manage cash forecasts we need accurate, up to date information.<\/p>\n<p>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.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"a-modern-approach-using-ai-ml\"><\/span><strong>A Modern Approach Using AI &amp; ML<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Analytics helps us to discover meaningful patterns in financial data. We <a href=\"\/blog\/harness-big-data-artificial-intelligence-blockchain-for-trade-finance\/\"><strong>harness the power of data<\/strong><\/a> 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.<\/p>\n<p>Think about deriving <strong>cash flow forecasts<\/strong> from all of your financial systems regardless of time, location or source. Analytics derive their outcomes from extensive mathematical modeling and computations utilizing advanced <a href=\"\/blog\/intelligent-document-processing\/\">artificial intelligence (AI)<\/a> 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 <strong>cash predictions<\/strong>.<\/p>\n<p>Today\u2019s spreadsheet <strong>cash forecasts<\/strong> 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 360\u2070 views into current, historic and future business outcomes.<\/p>\n<p>According to Ernst and Young Advisory Services group \u201cAnalytics is not a \u2018nice to have,\u2019 but a \u2018must have\u2019.\u201d Analytics allow the modern treasury department to take a proactive and thoughtful approach to their cash forecast model. The accuracy and efficiency of <strong>cash flow forecasts<\/strong> can be greatly improved using technological advancements such as machine learning (ML) and artificial intelligence (AI).<\/p>\n<p>Emagia\u2019s AI-driven <strong>Cash Forecasting Software<\/strong> solution <strong><a href=\"\/products\/cash-flow-forecasting-software\/\">automates cash forecasting<\/a><\/strong> 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 <strong>predicting cash flow <\/strong>is gaining more prominence in the wake of staff reduction, delayed payments and increased borrowing, Emagia\u2019s 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 <a href=\"\/products\/order-to-cash-automation-software\/\">intelligent analytics<\/a>.<\/p>\n<p><a href=\"\/products\/cash-flow-forecasting-software\/#request-demo\"><img decoding=\"async\" loading=\"lazy\" src=\"\/blog\/wp-content\/themes\/mainblog\/assets\/images\/blog-banners\/make-accurate-cash-flow-forecasts-using-ai.jpg\" alt=\"Make Accurate Cash Flow Forecasts Using AI\" width=\"898\" height=\"200\"><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>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&#8217;s COVID-19 Impact on IT Spending Survey, more than 40% of the businesses have added &hellip;<\/p>\n<p class=\"read-more\"> <a class=\"\" href=\"https:\/\/www.emagia.com\/blog\/how-to-forecast-cash-flow-from-receivables-using-ai-and-ml\/\"> <span class=\"screen-reader-text\">How to Forecast Cash Flow from Receivables using Artificial Intelligence (AI) and Machine Learning (ML)<\/span> Read More &raquo;<\/a><\/p>\n","protected":false},"author":1,"featured_media":2370,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[10],"tags":[],"class_list":["post-55","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cash-flow-forecasting-automation"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.emagia.com\/blog\/wp-json\/wp\/v2\/posts\/55","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.emagia.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.emagia.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.emagia.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.emagia.com\/blog\/wp-json\/wp\/v2\/comments?post=55"}],"version-history":[{"count":0,"href":"https:\/\/www.emagia.com\/blog\/wp-json\/wp\/v2\/posts\/55\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.emagia.com\/blog\/wp-json\/wp\/v2\/media\/2370"}],"wp:attachment":[{"href":"https:\/\/www.emagia.com\/blog\/wp-json\/wp\/v2\/media?parent=55"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.emagia.com\/blog\/wp-json\/wp\/v2\/categories?post=55"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.emagia.com\/blog\/wp-json\/wp\/v2\/tags?post=55"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}