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The Value of Cash Flow Forecasting

02 September, 2021

Cash is King.
Cash rules over all business processes and ultimately over business success. Insufficient cash flows will run any company into serious troubles, regardless of its background.  Thus, proper Cash Management and Forecasting is essential to any company’s success.

When making business decisions, it is crucial to have a clear understanding of the company’s true cash position and the cash impact a decision might have. Reliable information needs to be accessible fast – the sooner the CFO understands the true cash position and future development of the company, the sooner they can start executing plans or identifying areas that need improvement. Speed can, however, be a challenge, especially when data aggregation is done manually on top of daily business.

Understanding the liquidity position at any given moment is essential, yet it is not enough. To truly make intelligent decisions, a company needs an understanding of their future outlook; they need accurate cash flow forecasts. Having accurate cash flow forecasts increases the certainty and reliability of estimated cash balances and simplifies day-to-day liquidity management. It allows to create more accurate estimates of capital requirements and hence enables companies to optimize their cost of capital. Hence, accurate forecasts provide greater certainty and reliability for companies; however, achieving these forecasts is not always straightforward.

Some of the key factors ensuring and enabling accurate cash flow forecasts are:

  • Consolidation
  • Collaboration
  • Measurement

Consolidation – Receiving correct and consistent data from all relevant stakeholders is key. For finance teams to be effective, data collection and aggregation should be fully automated and secure so that the initial setup, maintenance, and daily execution to build forecasts are easy and maintainable.

Collaboration – To reliably plan, financial planners need to collaborate with colleagues across departments or entities in a group.

Measurement – Implementing a process to measure forecast accuracy in detail to identify sources of variance is critical to improving quality and ultimately reducing forecast variance. Without measuring forecast accuracy, it is impossible to make judgements about its reliability. Measuring daily, weekly, or bi-weekly will help uncover the fluctuations between the predicted value and the actual value that might otherwise go unnoticed.

Accurate cash flow forecasting can be established through the use of configurations; cloud-based solutions enable the tool to be customized to meet its users’ needs. These systems allow for more accurate cash flow forecasts to enhance the CFO’s decision-making.

The Financial Navigator enables you to improve forecast accuracy and effectively reduce financial risks through transparency and foresight. Cash forecasts are created on a rolling basis, allowing you to analyze cash flow sensitivity to achieve optimal liquidity planning. Our forecasting tool allows you to analyze cash flows across all banks, entities and currencies of your company.

Our Cash Flow Forecasting feature allows you to:

  • Reduce your financial risk through more accurate forecasts
  • Simplify your liquidity planning thanks to automatically recognized cash flow patterns
  • Identify business opportunities through sensitivity and scenario analysis


Learn more about the Financial Navigator or schedule a free demo now!



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