Treasury is becoming a more integral part of the strategic decision making process in corporations, with liquidity planning and cash forecasting considered the top challenges when it comes to providing critical insights as the basis for decision making. The pandemic has especially exposed corporates to the real-world consequences for not being informed and updated on short- and long-term cash positions.
Surprisingly, 91% of treasurers are currently using spreadsheets for cash forecasting, as the HighRadius 2019 Cash Forecasting Survey shows. Relying on these simple, but error-prone tools can lead to inaccurate liquidity plans and, consequently, damaging business decisions.
We have compiled a list of ten scenarios, illustrating the negative effects that inaccurate cash forecasts might have on your business.
- Lack of global visibility leaves accessible cash idle instead of using it to fund your operations internally.
- Failing to utilize internal funds forces you to borrow cash, leading to price interest repayments.
- Bank fees and borrowing costs are too high because your bank does not trust your numbers.
- A subsidiary fails to report an accurate forecast, causing you to incorrectly project your position.
- You cannot calculate cash flow at risk on spreadsheets, and FX volatility hits your P&L hard.
- Lack of visibility allows for fraudulent activity without an audit trail.
- Inability to identify future cash surpluses causes you to lose out on investment opportunities.
- Unable to quickly provide KPIs and metrics on the fly, you risk seeming uniformed in front of your CFO.
- Inaccurate cash forecasting leads to poor advice on business decisions, which can cost your company a lot of money.
- Unable to identify cash shortfalls, your company may run out of liquidity and go bankrupt.
ION Treasury has developed a step-by-step guide to accurate cash forecasting. Why don´t you take a look at our micro-session to avoid the scenarios we have just reviewed?
Cash forecasting: How to increase accuracy and speed
Cash forecasting is a pain point for over three quarters of treasuries globally. Find out in this 30-minute webcast, how ION Treasury can help you increase the accuracy and speed of your forecast production.