Use Technology to Improve Cash Forecasting
Are you taking full advantage of the tools available to streamline cash management? Uncover new ways to improve cash forecasting with technology.
Cash forecasting gives you visibility into your business’s cash and liquidity needs. Whether your forecasting process is simple and straightforward or complex and constantly changing, having the right tools can save time and avoid errors and oversights. Using technology to integrate data from all of your databases can also improve the efficiency of your cash forecasting.
Instead of relying on spreadsheets for organizing data and forecasting cash flow, opportunities exist to move toward integration and automation of business processes.
Establish Goals and Processes
Efficient cash management involves not only the ability to view snapshots of your organization’s current position, but also to consider future positions based on reasonably accurate forecasts of inflow and outflow. Analyze how purchasing, payments and receivables are managed to help you get a better handle on how long each step should take and identify areas that can be streamlined and automated using cash management tools.
Depending on your business model and liquidity needs, you may use a seven-day rolling forecast to ensure cash availability for daily operations and a 12-month rolling forecast for longer-term planning. You may also want to run various cash forecasting scenarios that identify potential cash excesses or shortfalls under changing circumstances.
Match the Tool to the Task
Speed up accounts receivable (AR) processing: Rather than mailing paper invoices to customers, use e-invoicing to send bills that can be paid through automated clearing house (ACH) or credit card transactions. This saves time and resources by reducing the need for manual entry.
For those customers who make check payments, you have a couple of options:
- Lockbox. All receivables are routed to a post office box assigned to Amegy Bank. Checks are processed and automatically credited to your account each day. This reduces the need for your staff to open envelopes, prepare deposit slips and get them to the bank and can cut days from receipt of payment to deposit in your account.
- Remote deposit capture. Checks can be securely scanned in and deposited to your account by your staff, eliminating trips to the bank to make deposits.
- Optimize accounts payable (AP). Once you negotiate the best terms you can with vendors and suppliers, you may not have much more leeway regarding terms. However, you may be able to automate AP to reduce the internal costs of processing payments and keep better track of when significant outflows are expected. Consider:
- Converting paper invoices to electronic versions upon receipt.
- Setting up a system that automatically matches purchase orders against invoices to avoid overpayments and flag incorrect or fraudulent vendor invoices.
- Making sure that AP data is immediately visible to your cash management team so they can use the information to forecast, plan and adjust as needed.
We’re Here to Help
Being able to accurately predict cash flow is essential when you’re making key business decisions such as the timing of purchasing, payroll and more. With a suite of products from digital banking to treasury management services1, we have the resources you need to help streamline your disbursements and receivables management. Contact your Treasury Management banker at Amegy Bank to learn more.
(1) Access to services such as Remote Deposit Capture Amegy Bank, TIB Amegy Bank and more. See your banker for Treasury Management product details and schedule of fees. Certain Treasury Management Services may require credit approval; contract may also apply.