How CFOs Can Unlock Millions in Cash Flow with Better Data

Written by Kalei White
January 31, 2023

In 2023, we’re in the midst of a data revolution. Businesses have access to more data than ever before and, more importantly, are able to leverage it.

This “big data” phenomenon is revolutionizing how companies operate: Netflix, for example, personalizes accounts for all its users, while Capital One sends offers to customers at the exact right time.

Amazon makes 35% of its sales through product recommendations, and auditing firm BDO uses data analysis to detect internal fraud.

These changes are thanks to the unprecedented level of visibility afforded by new data collation methods and automation. Yes, keep in mind all this is done automatically.

New technologies such as data lakes and artificial intelligence combine to cut costs and boost revenue – in fact, pursuing a big data strategy can boost a business’s operational margins by as much as 60%.

This shouldn’t come as much of a surprise, since, after all…

Successful Business Decisions are Based on Data

While intuition can lead us in the right direction, every decision made in business can – and should – be fortified by data. According to McKinsey, data-driven businesses are 19 times more likely to be profitable than companies that rely on their gut.

The methodology these businesses use is called data driven decision-making (DDDM). In the past, large teams were dedicated to this task, using all their work time to scour spreadsheets and – hopefully – come to the right conclusions. But this is changing.

That’s because alongside the data revolution has been a revolution in financial technology. Newer innovations include artificial intelligence, open banking, and automated forecasting. Automation saves immense amounts of time for finance teams. It’s also required to evaluate the huge data sets that exist today – a person or even a team of people could not reasonably do it.

Big data can help cut costs by streamlining operations. For example, one new AI-based technology is called predictive maintenance. This analyzes the condition of in-service equipment to keep production lines up and running as long as possible, boosting working capital.

Data also helps identify risk and prepare responses informed by more data. In a crisis, this allows you to react quickly with tailor-made solutions.

If you’re a business owner, there’s still room for intuition when it comes to making decisions. However, data will help verify that your plan will be successful.

Ultimately, many of the most important decisions you make come down to your cash flow situation.

Cash Flow Management

Among all pieces of data, a business’s cash position is the one that gives the best summary of its overall situation.

This metric indicates the business’s current ability to meet expenses like payroll, loan repayments, or even just operating costs. But as your cash position is always changing, it can be difficult to have a clear sense of what’s happening. This is why cash flow forecasting is so important. Cash flow forecasts show what your cash position is likely to be in the future based on current expenses and revenue.

Forecasts act as a guide by highlighting when you should focus on expansion and when you should scale back and build cash reserves. Knowing when to time these things so you still have liquidity to keep your business operating is certainly the most important thing you can glean from data collection.

Cash flow forecasting software is an integral part of the big data revolution. 

Automation records information free of error, while open banking ensures data is recorded across all bank accounts. Since cash flow is so important, you need to get it right – robust, automated forecasting software will be a critical part of any treasury’s toolkit in 2023 and beyond.

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The Importance of Scenario Planning

Scenario planning is when business managers re-evaluate their assumptions about the future. While many assumed the economy would stay healthy in 2020, for instance, few accounted for the global spread of Covid-19.

But, as you might guess, many businesses now have backup plans, in case another pandemic were to occur.

Imagine if businesses had been able to create a Covid strategy before Covid hit. They’d have built up their financial reserves and wouldn’t have been focusing all their effort on liquidating as much as possible as fast as they could.

This is exactly what scenario planning is all about – it’s when you come up with plans for unexpected situations before they occur. This enables you to be proactive instead of reactive.

Scenario planning can cover any type of situation. For instance, Covid-19 had a massive effect on supply chains, so you might be interested in running a supply chain plan. By setting variables and growth rates in, forecasts can show you exactly how a specific supply chain disruption would affect your business. In response, you set up countermeasures – for instance, identifying alternative suppliers.

You might also plan for a specific reduction in sales, say 10%, or the loss of appeal to a certain demographic, maybe Generation Z.

Because it requires so much data, scenario planning can be difficult to perform, but automated cash flow forecasting software makes it much easier. If there’s anything the last few years have shown, it’s that we shouldn’t assume anything when it comes to the markets – don’t neglect scenario planning!

Be Prepared for Economic Downturns

It goes without saying we’re living in times of economic uncertainty. Though inflation has abated somewhat, key indicators point to a recession in 2023, with many experts predicting as much.

If a recession does occur, one thing will make the difference between businesses that ride out the recession – even come out of it stronger – and those that don’t.  


While you probably guessed it, it’s 100% true!

In a downturn, you need to know when and where to spend capital most effectively, and where to cut costs. If the data shows a marketing avenue is not bringing in a healthy ROI, for example, it might be time to cut it. You then redirect marketing expenses into new channels supported by data.

With clear cash flow information, you’ll see areas of waste and know how to boost your liquidity. Of course, it’s best to do this before a recession hits.

We saw this recently with Amazon, who greatly reduced their Echo division in the largest layoff the company has ever witnessed.

Successfully navigating an economic downturn is all about visibility. Coupled with scenario planning, data lets you build up your best defense against recessions.

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Downturn Opportunities

Ensuring your business survives a downturn is not the only reason you should rely on data – you also want to ensure your business thrives during the recession. 

It may sound strange, but a recession doesn’t always have to be a period where your business shrinks: counterintuitively, a downturn also presents opportunities for it to grow. These include chances to boost operational efficiency, lower advertising costs, or even expand into new markets.

But if you’re scrambling to cut costs and boost revenue, you won’t be able to take advantage of these unique opportunities. 

Data also helps improve the efficacy of each of these methods. For example, lower advertising costs is not good enough on its own – you also need the data on how consumer spending patterns are changing in response to the recession. This way, you’ll know which advertising option to actually purchase.

While it can be tough to predict how long a recession will last, minimizing damage as much as possible ensures your business will be in a strong position once it does. This opens the door to even more opportunities as markets rebound and other companies begin to recover.

Data can be used to drive millions of dollars of improvements in cash flow, on both sides of the equation. It can help drive savings, and boost revenue. 

Cost Centers Are Being Transformed

The data revolution is also blurring the lines between profit and cost centers. In the past, we could easily describe law departments or tax divisions as cost centers because they were mainly reactive. But, as risk and compliance management grow ever more complicated, these divisions have had to become more proactive and strategic.

They largely do this through exposure planning, fortified by artificial intelligence and rich data pools.

For a clearer example of transforming a cost center to a profit center, we again look to Amazon, specifically its data management strategy. By introducing cloud computing to their company with Amazon Web Services, they could significantly reduce costs incurred by maintaining physical servers and offer this service to other businesses at a profit.

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Digitization – The Core of the Data Revolution

The usual way of collecting data is with spreadsheets – each transaction is recorded manually, and teams have to create each forecast by going through bank portals and then doing the math. Nobody would argue it’s not a laborious process.

But technology is changing all this. While computer spreadsheets were at first a technological innovation themselves – a big improvement over recording everything in a ledger – things have come a long way since Excel was first introduced in 1985.

The main issue with spreadsheets is that they don’t provide real-time cash visibility.

This is because it takes time to record all this information. Usually, once it’s all recorded, the data is outdated and no longer reflects your current cash position. 

Automated treasury management systems record transactions as they occur, so you’ll always have a real-time view of your cash position. Forecasts are generated automatically based on user input.

Have you ever found the results of your cash flow forecast don’t line up with what’s actually in the bank? This almost always comes down to an error in your records. When everything is recorded manually, chances are there will be a mistake – in fact, IBM reports that as many as 88% of spreadsheets contain at least one error.

Your cash flow forecast will only be helpful if it’s accurate and, through eliminating transcription errors, automation solves this problem, too. 

Open banking is another piece of the picture. While your business may have separate bank accounts, all these aspects of your business are interconnected – you need clear insight into each to understand the other parts. But siloed data won’t get you anywhere. You need to have all relevant data in front of you, from an easily-accessible, centralized location. Through APIs, this is exactly what open banking accomplishes.

Finally, artificial intelligence and machine learning refine cash flow forecasts by increasing the range of data accessed, and learning from past business performance.

With accurate, refined data, you’ll never be misled. You’ll always have access to forecasts, and be able to make quick but highly-informed decisions.

Join the Data Revolution

Trovata is proud to be at the forefront of the data revolution. As a next-gen technology platform, Trovata is helping many of the world’s largest financial institutions digitally transform commercial and corporate banking with our growing network of direct API integrations. 

What that means for you is the ability to take full control of your multi-bank data with a single source of truth.

Leveraging APIs, a cloud bank data lake, and machine learning technology, Trovata empowers you to unlock deeper cash insights to support data-backed decisions, optimize investments, and gain total cash flow visibility.

Curious to learn more? Book a Trovata demo today!

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