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3 Benefits of a Cash Flow Forecast Software | Payference

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By now it’s a well known fact that automation is the key to improving overall efficiency for businesses of all sizes and in all industries. A lesser known fact is that cash flow forecasting software not only automates accounts receivable processes to improve cash flow but goes one giant leap further.

When the cash flow forecasting software is driven by machine learning (ML) and artificial intelligence (AI) it can enable finance teams to manage cash better and forecast with much higher levels of accuracy.

In case you’re still on the fence about prioritizing this kind of software which can truly transform your AR department, we’re going to nudge you in the right direction by going over the top three benefits of cash flow forecasting software.

Cash Flow Forecasting Software: Top 3 Benefits

Investing in AR automation software is not about jumping on a technology bandwagon. Afterall, when it comes down to it no one outside your finance team will likely know that you’ve added automation technology to that part of your operations. Your customers, however, will notice the standardized and timely communications, a reduction in errors and the convenience of being able to make online payments through a self-serve portal.

And while it’s true that digitally transforming your account receivables will increase efficiency and effectiveness and therefore give you a competitive edge, you want to make sure whatever solution you ultimately decide upon gives you a substantial ROI. Review the following benefits of a cash flow forecast software and think about how differently you could be operating if this kind of technology were added to your business. 

1) Streamlined processes = Greater efficiency

Although the accounts receivable department is usually not considered to be the most dynamic and exciting part of a company, the work it carries out is critical to the health of a business regardless of its size. Many AR teams are comprised of only a few individuals who have to manage anywhere from a few dozen to a thousand accounts. To keep track of all the outstanding balances and payment terms, traditionally they’ve had to depend on Excel spreadsheets and random notes in customer files. 

Transferring data into spreadsheets requires an inordinate amount of manual effort and is prone to human error–and tracking down the source of an error to make the necessary corrections wastes even more time.

Automated AR workflows eliminate the time-consuming and tedious manual input needed for invoicing and reconciling accounts. Using templates and predetermined deadlines, the software is set to automatically send payment reminders and overdue alerts. Additionally, instead of someone on your team having to cull through information to determine which accounts are past due and need to be contacted in person, the software can generate a call list in a snap.

By having these workflows automated, you free up your finance team to use their skills and creativity to work on projects that add more value to the business.

Cash flow forecasting software also helps keep everyone on the same page–literally. Rather than account data being siloed, all customer information is updated and kept in a centralized location for immediate and easy access by any authorized user. This reduces the risk of inconsistencies and breakdowns in communication that can occur on a regular basis when finance members work from their own spreadsheets and notes– and especially when key AR personnel are out sick or on vacation. 

2) Real-time centralized data = Increased accuracy

Businesses that rely on a manual approach to manage their accounts receivables run into all kinds of challenges when it comes to accuracy. Trying to piece together data from disparate sources such as spreadsheets, accounting systems and even notes scribbled by hand can result in errors, omissions and unreliable reporting.

Obviously, errors in calculating what is owed or when can have a significant impact on cash flow and other aspects of cash management and forecasting. Inaccuracies can affect purchasing decisions, borrowing, growth strategies and more.

And when you’re sending out invoices with incorrect amounts due or late payment notices when the payment has in fact been made, you diminish the trust your customers have in you and detract from their customer experience.

Manual processes lead not only to mistakes that waste time and harm customer relationships, they lead to wasted effort because the data used for reporting and forecasting is not in real-time. It can take finance teams days, sometimes even weeks, to gather data and synthesize it for presentation. But because the cash positions are not up-to-date, the information may not be truly useful and the insights could point to misguided actions. Just think about how many times you’ve had customers pay an outstanding balance the day after your team has handed over their AR aging report. That represents a lot of wasted effort and time that could be put to use in a more profitable way.

3) Faster collections and AI technology = Increased cash flow

The quicker you can get invoices into your customers’ hands, the faster you can get paid. So speeding up the invoicing process, including any and all approvals, through automation is the first way that cash flow forecasting software helps to increase cash flow and reduce DSO. 

Add to that the ability to offer your customers multiple payment options and access to their account information through a self-serve portal and you’ve just provided a welcome convenience that also contributes to accelerated collections.

Issuing invoices quickly and offering conveniences is preferred over offering huge discounts to boost payments. You may get a higher percentage of payments coming in, but still not increase cash flow because the total amount is smaller than it should be. 

Another reason to increase cash flow through efficient and thorough collections is to avoid having to borrow money as a way to improve cash flow. Borrowing is expensive and means you’ll be paying interest on the loan. 

As you can see, implementing cash flow forecasting software is a cost-efficient way to improve cash flow. After onboarding, your finance team can use the software solution to standardize your collections strategy and workflows. With automation to handle sending out a series of well-timed communications, there will be significantly fewer invoices that fall through the cracks and fewer past due accounts.

While we’re on the subject of actual cash flow, let’s not forget the importance of being able to predict cash flow with a high level of accuracy. Because many business decisions frequently need to be made well in advance, it’s crucial to work from reliable data at any point in time.

Cash flow forecasting software that leverages AI technology can learn over time to predict with remarkable accuracy incoming payments and identify high risk accounts that threaten a healthy cash flow.

The Benefits of Payference

Payference is the cash flow forecasting software that allows you to manage your entire cash flow and working capital options with a single AI-powered tool. Ideal for mid-market businesses, Payference offers uncomplicated cash control with all the functionality for streamlining AR processes plus advanced Payference IQ technology to provide cash projections for more accurate real-time forecasts. It’s one solution for:

  • Faster invoicing
  • Accelerated collections
  • Optimized working capital
  • Improved productivity
  • Automatic account and bank reconciliations 
  • Paperless processing
  • Automatic reminders and notices
  • Real-time cash positions
  • Improved cash forecasting
  • Seamless integrations
  • Intuitive user interface 

Still have questions? Our team likes nothing better than learning about your unique needs and challenges. Helping businesses distill what they really need to get the most out of automating their AR process is what we do, so give us a call or set up a demo today.