Most times, due to the unavailability of robust systems, treasury analysts themselves gather the data on variances manually at the last moment, and usually only when treasurers require immediate feedback.
Aggregating this data manually is tedious while using manual systems such as spreadsheets or legacy systems such as TMS. But spreadsheets do not allow tracking individual cash movements for each type, which makes it difficult to make confident decisions.īusinesses have data stored in different formats in disparate sources (ERPs, bank portals, FP&A systems, TMS). There are complex cash flow categories like A/R, A/P, and CAPEX at regional and company levels. If seasonality is not incorporated into the cash flow forecasting tool, mid-market companies will be unable to maximize profit margins or benefit from cost savings. Seasonality is often hard to factor in because each business has peak and low sales times. The following are some of the issues that mid-market companies face that affect cashflow forecasting accuracy: What are the limitations of manual or legacy cash forecasting systems? However, their forecasts aren’t often accurate to make prudent decisions because of manual or non-scalable systems. Hence, they require accurate cash flow forecasts to improve their long-term decision-making. Mid-markets usually focus on forecasting future cash positions, proactively planning for any cash shortages, releasing trapped working capital, and making borrowing decisions. For example, an accurate 13-week cash forecast provides complete visibility into an organization’s cash balances until the following quarter’s completion.Īccording to a survey of Global Treasurers, 89% of treasurers stated cash forecasting as their top concern, and 83% stated cash forecasting inaccuracy as their most significant concern.
Cashflow forecasting is important for mid-market companies because it gives the necessary vision into the future to detect liquidity shortages.