Cash flow is often on the minds of CFOs and treasury and budget managers. Yet, at the same time, it’s one of the hardest parts of a business to accurately forecast. With so many factors contributing to cash flow—everything from interest rates to sales cycles—many of those involved with it struggle to get a proper handle on forecasting it.
Of course increased focus on cash flow is a good thing. However, as organizations request more and more information from treasury at a faster pace, conflict has a potential to grow.
A 2015 study by CFO Research and sponsored by SAP, titled Next-Generation Needs for Cash Management, highlighted the increasing challenges faced by management when it comes to cash flow:
“Eight out of ten respondents (80%) say that complexity and volatility in the business environment has made cash management more important today. But a majority of finance executives (63%) also say that, compared to five years ago, they now find it more difficult to manage cash efficiently and effectively.”
What explains cash flow’s increased complexity? There are several factors driving the conversation around it that contribute to the complexity.
Real-Time Information Leads to Agile Decision Making
Over the past few years, businesses have become increasingly focused on making business decisions more quickly to act on potential new opportunities. Technology now plays a major role in the ability to quickly compile and access information—a lack of which has traditionally hampered decision making.
In the past, it might have taken weeks of interdepartmental coordination and number crunching to update an Excel spreadsheet and get a snapshot of the financial health of an organization. Now, that data is at our collective fingertips and can be accessed at any moment. As organizations request more data from treasury more often, it’s critical to have processes in place that allow quicker and more accurate data collection.
Programs and platforms that enable organizations to have up-to-the-minute data means they are better positioned to make decisions more quickly. Organizational dashboards that highlight KPIs means that key decision makers can have clear, insightful views of the data that are the drivers of the business, so they can make more accurate decisions that rely on cash flow.
More Coordinated Management Teams
Hand in hand with real-time data enabling more agile decisions is the trend of accounting, finance and treasury department managers becoming part of the decision-making team.
This is important in several ways. First, they have the access to the technology that is speeding up information collection. Organizations have routinely waited a day or more to be able to consolidate their cash positions, meaning the traditional key stakeholders were forced to wait until getting that information to move forward.
This gives CFOs, treasurers and budget managers the opportunity to step into more strategic roles as important contributors and decision makers in operational strategies.
Now, with more coordination and cooperation between departments, the finance department has a key role to play beyond just wrangling the data and preparing the numbers for cash flow accuracy. CFOs and budget managers can take the lead in streamlining the process between departments, not only saving time but increasing overall efficiency as well.
As organizations grow more complex, so do their cash flow issues. It requires a coordinated effort to take the right steps to ensure future cash flow forecasts can be projected both accurately and efficiently.
Interested in doing more of a deep dive into how to best monitor and maintain your organization’s cash flow? Join this webinar: The CFO Playbook on Cash Management: How to Ensure the Accuracy of Your Cash Flow Forecasts. In it, you’ll learn current trends in cash flow management, as well as best practices for forecasting cash reserves.
Businesses of every description rely on the Budget Maestro™ family of software solutions by Centage Corporation to improve the efficiency and effectiveness of their business budgeting and planning, financial forecasting, financial consolidation and reporting processes. For more information, take a tour of Budget Maestro, contact Centage, or call 800-366-5111 now.