By Pieter Cronje, Director and Head of Cash & Liquidity


Many of us would believe that treasury and finance departments have by now perfected their cash forecasting, providing the CFO a level of confidence in the numbers. Apparently not. Cash and liquidity risk is one of the biggest challenges for organisations to manage, according to various studies performed by analyst houses PwC and Deloitte.


Due to global uncertainties, rising interest rates, or regulatory change, many companies realise the benefit of having an accurate cash flow projection and are investigating options to expand and greatly improve their current cash flow forecasting efforts. 


Here are some key factors that can help organisations turn inefficient cash forecasting into efficient cash forecasting:


1. Using transaction-level/granular data to identify cash flow drivers


Many treasurers want an accurate cash forecast, which combines cash flow drivers and assumptions. But how well do they understand the various cash flow drivers? Do they know what’s eating and feeding their cash, beyond the high-level AR and AP treasury flows that the Treasury Management System (TMS) can provide?


For example, a traditional TMS may be able to consolidate operating company anticipated flows, but keep in mind that these cash flow estimates are already consolidated from the existing business transactions, and thus can hide some of the cash flow drivers.


In order to develop a strong and accurate foreacast, a treasurer needs straightforward, error-free access to transactions. Today, treasurers can drill down to transaction-level details thanks to technology such as APIs, treasury aggregators, and Big Data analytics. Being able to automate and link with all banks to obtain daily balances and transactions, treasury teams don’t have to enter into various banking portals or struggle with security tokens, and neither do they have to download statements, extract balances, then add all that information to a spreadsheet, which is then forwarded. Automated cash flow forecasting further eliminates the need for IT resources to maintain host-to-host communication and cash reporting formats. 


2. Cash flow forecasting generally involves Excel spreadsheets and a lot of man-hours


Very often, treasurers are forced to turn to spreadsheets to calculate forecasts due to the fact that many of the traditional TMSs do not offer the required flexibility. 


For example, let’s look at applying payment behaviour. Invoices and sales orders should include payment info, but many companies struggle to take the actual payment data into account as they haven’t found the appropriate algorithms to include into their forecasts. This means that treasurers then have inaccurate estimates and have to spend a lot of time explaining why…! Applying the appropriate forecasting logic is vital, but defining it smartly for accurate forecasting is difficult.


3. Leveraging the cash projections 


Predicted forecasted results should be used by the organisation to take action and make better decisions. Accurately forecasting the future has great value for any organsation, but there is even more value in considering multiple scenarios by changing some of the assumptions, such as payment runs. 


Unfortunately, changing different scenarios often trigger a lot of additional manual work, especially when working in Excel, and thus many finance teams avoid this as far as possible.


However, in order to maximize the forecasting process, it is crucial for a treasurer to develop several projections and examine the impact on the organisation’s cash optimisation.


TreasuryONE’s dedicated Cash Flow Forecasting tool


With cutting-edge technology at the heart of our treasury technology portfolio, we help businesses transform their process of forecasting cash by reducing manual workload and reporting timelines by up to 75% – saving finance teams countless hours of valuable time and bringing crystal clear visibility over current and future cash flows with increased accuracy and interrogation capabilities.


CashAnalytics, a cloud-based system powered by TreasuryONE, eases the burden of preparing and collating multiple cash flow forecast workings and consolidation reports via spreadsheets. The platform looks and feels like excel, is integrated with the ERP for accurate bank balances, ERP integration of AP & AR information with access levels as granular as line item level. The result is faster collation freeing up time to review forecasts, highlight potential issues and the ability to easily perform what if scenarios. CashAnalytics stores historical data, includes a detailed audit trail and reflects the forecast submission status at bank account level. The comprehensive reporting tool makes it easy to analise forecast vs forecast  and forecast vs actual reports to improve the accuracy of the information. 




In conclusion, cashflow forecasting is a critical aspect of financial management for any business, and it requires accuracy, efficiency, and timeliness to be effective. By implementing a dedicated cashflow forecasting tool, businesses can gain better insights into their cash position and make much more informed decisions that can positively impact their financial health. Embracing technology is not only necessary in today’s business landscape, but it is also an opportunity to stay ahead of the curve and gain a competitive advantage.[/vc_column_text][/vc_column][/vc_row]