25% of CFOs Update Forecasts on a Weekly Basis

Chief financial officers (CFOs) and corporate treasurers view cash management as a pressing challenge, but only a fraction of them are using technology to improve the process. Amid successive waves of digital innovation, cash forecasting has in many ways remained unchanged.

This is especially notable because finance leaders consider accurate forecasting to be the top pandemic-caused challenge they face.

To deal with the new reality of cash management, 93% of CFOs have changed how often they re-forecast liquidity and 25% of CFOs are updating forecasts on a weekly basis, according to the Corporate Cash Management Playbook, a PYMNTS collaboration with Red Hat, Infosys Finacle and Intel.

Get the report: Corporate Cash Management Playbook

One likely reason why forecasting has emerged as a particularly acute challenge is that finance executives have been accustomed to relying on static predictive variables such as past-quarter performance and seasonal economic factors that fall short of providing real-time insight into their cash positions.

Seeking Real-Time Visibility Into Cash Positions

The pandemic has shed light on the pitfalls of using such static models. The widespread cash flow shortages that have emerged during the pandemic have made real-time visibility into cash positions more critical than ever. CFOs and corporate treasurers must now contend with a wide range of dynamic conditions and possibilities, such as a trusted supplier going out of business or international freight companies greatly increasing their rates due to high demand.

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Set-it-and-forget-it strategies simply will not suffice amid current economic conditions. This uncertainty weighs heavily on the treasurers and CFOs responsible for making sure companies have the liquidity necessary to meet daily obligations and the working capital to respond to changing business challenges and opportunities.

To help them make projections in a time of uncertainty, CFOs and other financial decision makers need powerful tools as well as real-time visibility and control over a growing array of banking accounts.

Enabling Real-Time Forecasting

Innovations in cloud computing and application programming interfaces (APIs) have the potential to bring bank-level operations to the C-suite and enable real-time forecasting that outperforms static models. Among the bank-level cash management capabilities that digital and cloud technology has made accessible to CFOs and their teams are tools that allow for company and division-specific projections based on real-time data and performance, along with scenario-based forecasting enhanced through artificial intelligence (AI).

Technological advanced in recent years — specifically in cloud computing and APIs — have given rise to a new generation of financial management tools that can effectively leapfrog once-daunting technical hurdles.

These tools allow corporations to manage multiple payment flows from wide-ranging sources, including from digital channels such as eCommerce sites and platforms. Leading technology providers offer these services not as stand-alone applications but as holistic systems that can be easily integrated into enterprise resource planning (ERP) software.

The pandemic has spotlighted the value of these innovations in keeping funds flowing at a time when finance teams are working remotely and holding the potential to bring new levels of visibility and controls over corporate funds.