Reviewing Best Practices for Treasury’s Cash Forecasting Workflows

Cash Forecasting is a Fundamental Priority for Modern Treasury & Finance Teams

For as long as corporate treasury has existed, cash and liquidity management have been two of the primary responsibilities entrusted to practitioners. Today, these responsibilities often include cash forecasting and working capital analysis tasks as well, and in recent years, the emphasis placed by organizations on improving these functions has skyrocketed in importance.

Why is this?

By accurately predicting their company’s future cash flows, treasury departments can make informed decisions regarding investments, borrowing, and overall liquidity management. Today, cash forecasting allows businesses to assess their ability to meet financial obligations, optimize cash balances, and plan for future capital expenditures. It also provides visibility into short-term and long-term cash requirements, enabling proactive measures to be taken to avoid cash deficits or excessive cash holdings.

Moreover, cash forecasting serves as a fundamental tool for risk management, allowing treasury professionals to identify potential liquidity gaps, currency exposures, and interest rate risks. With an accurate understanding of cash flow patterns, corporate treasurers can ensure that sufficient funds are available to support daily operations, manage working capital effectively, and seize growth opportunities.

In 2023, industry data has clearly highlighted the extent to which cash forecasting is being prioritized by corporate practitioners. In fact, a recent panel survey of over 250 practitioners recently highlighted that cash forecasting remains a critical priority not only for treasury, but for the CFO as well. In addition, this survey evaluated the investment plans of treasury groups over the next year and found that cash forecasting technology is top of the agenda for new spend over other areas such as payments and security. While there are many reasons for this, a pronounced spike in volatility that has been impacting the corporate environment since 2019-20 is one major factor.

Download the full whitepaper below to learn more about how treasury practitioners can best manage the cash forecasting function in 2023 and beyond.

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