8 Top Benefits Organizations Realize from Holistic Cash Forecasting

Matt Clark
By Matt Clark | April 28, 2022
About Matt

When you think about cash flow optimization, you probably envision an increase in cash flow, and while that can be a result of the process, it is not the whole picture.

According to The Future of Finance: 360 Cash Flow Visibility + Control, a study conducted by Forrester Consulting and commissioned by Corcentric, 73% of finance leaders believe enabling holistic cash forecasting would be valuable to their organizations. CFOs understand that a real-time complete view of cash positions will help reduce risks of frauds, process breakdowns, and funding gaps.

Whether you’re a small business or a big one, holistic cash forecasting can help achieve those goals and improve overall business operations by going beyond balance sheets. The report cites eight specific benefits of enabling holistic cash forecasting. Let’s discuss them.

1. Smarter decision-making

A whopping 97% of finance leaders said smarter decision-making is something they would expect or have already realized from holistic cash forecasting. If you want to make good business decisions, you need good information, and not just a spreadsheet of financial statements. Good information becomes available when you automate accounts payable (AP) and accounts receivable (AR). The right tech partner will implement automation software that includes the on-demand reporting capabilities necessary to analyze and predict incoming cash receipts and outgoing cash payments. Having these metrics at your fingertips means better strategic planning and smarter financial decisions around activities like funding, investments, and procurement.

2. Improved payment user experience

The second most realized benefit of holistic cash forecasting is improved payment user experience. These days, CFOs are prioritizing the user experience as much as they do profitability. According to the report, more than eight of 10 respondents report that payment users increasingly expect the same quick, secure, and efficient experience that consumers have. All of that is possible when finance processes undergo a digital transformation. Automation removes manual processes that are error-prone and time-consuming and streamlines workflows with technology like e-Invoicing and ERP integration.

3. Increased business agility

As a result of the disruptions caused by the pandemic, many CFOs have shifted their focus to becoming more agile, which means becoming more insights driven. In fact, according to the report, 74% of respondents said that disruptions of this past year made them realize they need more holistic and real-time views of cash inflows and outflows. A comprehensive solution provider can develop a holistic cash management tool that allows a company to be prepared when it comes to things like risk management, supply chain management, fraud management, and more effective financial planning. Simply put, holistic cash forecasting takes you from hindsight to foresight.

4. Improved financial control

Holistic cash forecasting uses reliable and real-time data from AP and AR, giving you full visibility and control when it comes to invoice status, and thus cash inflows and outflows. When you have more control over the entire payables and receivables process, you have more control over when payments are made, discounts, DPO, DSO, and overall business planning as it pertains to the financial status of your company.

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5. Ability to optimize time/value of money

Manually processing and producing invoices is inefficient and a waste of resources. Investing in AP and AR automation as part of a holistic cash forecasting strategy frees up time for team members to focus on higher-value work. Also, manual data entry isn’t just time-consuming, it’s costly. Automated electronic payments cost an average of $2.94/invoice vs. $15.96/invoice with manual processes. That’s a cost savings of about $13/invoice. Optimizing cash flow means consolidating business processes so that precious capital, and time, is not spent on unproductive methods of payments and receivables.

6. Increased profitability

What company doesn’t want to be profitable? A digital transformation of payment processes that involves software, implementation, and managed services, can unlock working capital. Holistic cash forecasting allows companies to allocate cash resources correctly, and when resources are managed effectively, business performance and bottom lines improve. Take for example DPO. By gaining insight into this figure through automation, AP can define better payment terms and capture supplier discounts.

7. Less reliance on credit/other forms of capital

Having a firm grip on your company’s cash flow creates confidence in your company’s financial situation, both currently and in the future. When you have a holistic view of transactional data, you can plan better for expenditures and allocate the funds you have accordingly without having to rely on business loans and credit cards. Even if your company does decide some borrowing is necessary, banks and investors will want to view your cash flow statements and you’ll be happy that you invested in the tools to enable holistic cash forecasting.

8. Ability to uncover funding for key initiatives

One of the risks identified in the study associated with lacking a real-time holistic view of cash inflows and outflows is limited ability to uncover funding to support key initiatives that stakeholders care about. In other words, cash flow optimization results in the ability to allocate your money as you please, whether it’s towards new hires or some other key investment.

Not every journey to holistic cash forecasting has the same roadmap. Companies come in all shapes and sizes, with different needs and challenges, and varying degrees of support from key stakeholders. That’s why it’s so important to enlist the right professional services provider that can help with both the new technology implementation and process changes.

At Corcentric, we combine software and managed services to automate AP and AR from end-to-end while also providing a strategic partnership that goes beyond implementation.

Gain a competitive advantage and get started on your cash flow forecast today.

Download the study The Future of Finance: 360-Degree Cash Flow Visibility and Control to find out more.

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