The answer to economic uncertainty: Increased cash flow visibility


You can’t manage what you can’t see is a truism that runs through every area of a business. Contracts, procurement, POs, invoices, RFPs, supply chains, supplier information, payments – whatever it is, without visibility you’re always going to be courting some element of risk.


The financial reality

In the case of cash flow management, the risks of poor visibility could rapidly devolve into an existential crisis. That may be why the perpetual number one item on Treasury’s agenda is cash flow forecasting; “More than a quarter of global cash is not visible to corporate treasury on a daily basis.1


What leading CFOs say

Volatility and unpredictability in cash flow – especially in times of business disruption, whether economic, social, or logistical – demands an intelligent tactical/strategic approach to financial planning that puts your organization in a position to leverage funds when they’re available. That requires holistic visibility to both inflows and outflows.


Why cash flow visibility is critical

According to a recent report by the Institute for Financial Management (IOFM), How To Overcome Barriers To Cash Flow Visibility By Overhauling Old Ways Of Working, “If Global 1000 companies were to adopt the cash management best practices employed by top performers, they could free up nearly $800 billion in cash flow, or $800 million per firm.” That’s a lot of money left unseen and unproductive.


Poor financial visibility: The backstory

The economy is seemingly strong, especially rebounding from the global pandemic, but things feel uncertain and a bit fragile, with inflation putting a damper on the general outlook compounded by a fraught geopolitical situation.

With all that as a framework, CFOs and financial teams saddled with a lack of cash flow visibility will not have the financial forecasting capability necessary to make optimal business decisions. This lack of visibility exists for a number of reasons, generally including some combination of people, process, and technology:


    • Overreliance on manual or partially automated processes
    • Inadequate staff and/or skills for accurate cash flow forecasting (or teams are mired in those manual processes just mentioned)
    • Disparate or outdated backend financial technology systems that aren’t robust or integrated, or lack true master data management
    • Inconsistencies and siloes between cash inflow and outflow processes – a lack of holistic oversight


Any one of these conditions makes cash flow visibility hazy; when there are multiple conditions, then financial forecasting becomes exponentially difficult.


So, what’s the answer? A clear visibility practice

Putting a solid holistic cash forecasting strategy and practice in place requires total commitment (looking at you, C-suite), a rigorous use of analytics, silo-busting collaboration between AP and AR processes, and a real-time view of cash inflows and outflows.

Easier said than done? Not as much as you might expect. The executive buy-in to being cash-flow focused should be a given – after all, liberating working capital is going to make it much easier and more efficient to fund other corporate initiatives. Where significant effort should be concentrated is on developing seamless AP and AR.

Digitally integrating AP and AR processes through cash flow forecasting solutions and automation will unlock the crucial data needed for insight-driven decision making.

AP and AR data hold an untold wealth of information on company health, as they are effectively both sides of the cash flow coin. When combined with a heavy data management and analytics practice, that’s where real-time holistic cash flow visibility can be gained and leveraged to drive financial agility and improve forward thinking strategies.


Forward thinking

According to the aforementioned report, How To Overcome Barriers To Cash Flow Visibility By Overhauling Old Ways Of Working from IOFM, only 13.5 percent of organizations currently use advanced technologies to forecast their cash. That financial vulnerability is begging for risk, but it’s also being addressed: The same report cites a Deloitte statistic that 18% of organizations plan to deploy automated liquidity management solutions within the next 12 months.

Since technology and automation can help tap the hidden working capital in an organization, the immediate goal should be to find a solution provider who can help drive an AP/AR transformation. Ideally, that AP and AR automation technology partner will also offer:


    • Broad industry expertise
    • A track record of success
    • Best practice advisory
    • Additional managed services


Weathering economic uncertainty becomes a lot more certain when you have the insights and financial agility that come from holistic cash flow visibility. To learn more about how to achieve it, download How To Overcome Barriers To Cash Flow Visibility By Overhauling Old Ways Of Working from IOFM.


If you’re ready to see what you’ve been missing in your cash flow, get in touch with Corcentric today. We’ll give you the big picture.


    1. 2019 Global Treasury Benchmarking Survey, © 2019, PwC.