3 Ways to Improve Your Cash Flow Forecasting

Written by Keegan Chamberlin
April 21, 2022

Treasurers often struggle to improve cash flow forecasting. It is challenging to gain insights from bank data to drive more informed decisions. While access to bank data is still a challenge, there are plenty of other limitations treasurers face which prevent them from creating stronger insights in their cash flow forecasting:

3 Limitations to Stronger Cash Forecasting Insights

  1. Lack of Proper Technology and Tools
  2. Limited Time and Team Resources
  3. IT Support

Lack of Proper Technology and Tools

Only 32% of treasurers still primarily rely on Excel spreadsheets to manage their treasury operations, but only 10% believed that their day-to-day finance processes have been 90% digitized. (Source)

If you are in this group — still using spreadsheets for cash flow forecasting — you could be losing out on valuable insights from your balance and transaction data. Every time you must create a baseline forecast or perform scenario planning, your dataset must be reset.

You lose time scouring your multiple bank portals, downloading CSV files, and exorbitant hours normalizing this data. This precious time could be spent performing strategic analysis and discovering those critical cash insights.

Limited Time and Team Resources

As your business scales, your balance and transaction data can increase exponentially, to the point where all you have time for is to create a weekly or monthly cash forecast. Losing out on time and team resources for data management leads to having less time to analyze the effectiveness of your cash management strategy and to making less effective decisions. 

“Data is the New Oil. Data is just like crude. It’s valuable, but if it’s unrefined, it really cannot be used.” — Clive Humby, a British mathematician working in data science

Technology (tools) should give you more time to perform essential treasury tasks and transform your data into powerful insights instead of being a bottleneck to analysis.

IT Support

IT ensures your data is consistent, available, and resilient within every one of your reports. Custom reporting often takes weeks to build leaving treasurers are uncertain whether the data source is accurate and up-to-date.

Cash reporting and cash forecasting from spreadsheets and legacy TMS requires IT support then, just to get your job done.

The bottom line is that if your current treasury tech stack requires you to perform arduous data manipulation to discover key insights, it’s holding you back from gaining instant and accurate cash visibility. There’s a more efficient and effective way to forecast. 

How to Improve Cash Flow Forecasting at Your Business

  1. Future-proof your business’ data strategy
  2. Automate cash forecasts and reporting
  3. Utilize AI and ML to improve the accuracy of cash flow models

Future-Proof Your Business’ Data Strategy

If you have to refresh your dataset every time you build a cash flow forecast, your treasury needs to rethink your access to data, data performance, and if you can rely on your data management methodology long-term. 

The best way to improve access to your data is to future-proof their data strategy with bank APIs paired with an automated cash management platform, like Trovata.

Our extensive library of open banking APIs establishes direct rails between your banking providers and your Trovata platform, automating the consolidation and normalization of your balance and transaction data across your global bank accounts into a Multi-Bank Data Lake™.

Automating data management processes has saved our clients thousands of hours, which has empowered them to focus on strategic analysis that grows their business:

“When I first joined Eventbrite, my day-to-day consisted of logging on to all of our different bank portals, running reports to see balances for each of our accounts, and then trying to standardize all this data in excel to build summaries…I spent 2-3 hours a day just pulling and normalizing bank data before Trovata, and that wasn’t a good use of my time… With Trovata, we have saved 12 hours a week from doing manual work, which is a big deal.” 

– Nial Burke, Global Treasury Manager at Eventbrite

eventbrite case study

“Trovata gives us flexibility and control over our data. While most of our accounts are automated, Trovata ensures we can still add in additional data from outlier accounts. Just being able to key in the balance on-the-fly allows us to have full visibility across all of our accounts.” 

– Tim DiLillo, Director of Treasury at GoTo (Formerly LogMeIn)

goto case study

Automate Cash Forecasts and Reporting

Gaining richer access to your data is just one piece of the cash flow forecasting puzzle. If you are still manually managing your data in spreadsheets, your analysis capabilities are still limited. Automating the generation of your cash reports and forecasts doesn’t just save you time, it empowers you to perform more aggressive scenario planning. 

As we saw during the COVID-19 pandemic, treasuries that were able to proactively forecast many scenarios were able to identify potholes within their cash management strategy and implement cash contingency plans when those scenarios became a reality. Extensive scenario planning just isn’t possible without automation.

Utilize AI and ML to Improve the Accuracy of Cash Flow Models

Artificial Intelligence (AI) leverages computers and machines to mimic the problem-solving and decision-making capabilities of the human mind, while Machine Learning (ML) empowers computers to learn without explicit programming or human intervention once initialized. — IBM on AI

These two technologies have a significant impact on cash flow forecast accuracy: they find anomalies, insights, and patterns humans unlikely to discover through simpler cash forecasting methods.

Trovata’s ML and AI capabilities not only transform your cash flow forecasts into powerful insights, but also increase the accuracy of your forecasts and scenario planning over time.

Every time your treasury generates a new scenario in Trovata, based on user-defined custom variables, like a decrease in sales of a particular product, or an increase in variable expenses, ML finds and measures directionality around time and relationships of certain transactions across banks. Our AI continually leverages patterns in your historic bank data to produce more accurate forecasts.

ML and AI together will ensure your treasury can quickly and accurately forecast around changing scenarios, business decisions, and potential investments. You’ll be prepared for any growth opportunities which arise.

Strengthen Your Cash Flow Forecasting With Trovata’s Automated Cash Management Tools

While digitizing and automating your cash flow forecasting may sound daunting, especially when your treasury has forecasted manually in spreadsheets for years, you do not have to go it alone.

Download our Essential Treasury Reporting and Forecasting Guide to discover how your treasury can gain critical insights across your global bank accounts and analyze, report, and forecast faster and more accurately.

download the essential treasury reporting and forecasting guide

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