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Cash Forecasting Software: What to Look For in a Solution

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Just like shopping for any other product, once you’ve decided you want a cash forecasting software solution, you have to make a choice. And to make the best choice, you really should compare the many options available to businesses of all sizes. 

At first glance, all the products in the category may seem like they would do the job. They promise to increase efficiency, reduce costs and, most importantly, provide data in real-time for better cash forecasting and management. But how do you know for certain that the solution you’re about to settle on is the right one? 

If you’d like to have confidence during your search as well as in your final software selection, take a few minutes to read on. In this article, we’ll explain what cash forecasting software is, review the benefits for CFOs and finance teams and finish up with a list of features you’ll want to check out.

Cash Forecasting Software 101

What exactly do we mean by cash forecasting software?

Although most software solutions in this category will offer a variety of functionalities, the chief reason for a cash forecasting solution is to get a clear view into available cash. With this digital tool finance teams can quickly see if the business has enough cash to take care of its payables in the short term. They can more accurately predict cash flow and minimize the risk of a cash shortage.   By providing real-time cash positions and other key information about available resources, the cash management software also enables them to optimize working capital.

How does cash management software differ from accounting software? The two can and do work together (integration with other systems is one of the features we’ll discuss later), but generally, accounting solutions only perform basic accounting tasks as they relate to purchases and sales, disclosures, bank statements, year-end entries and fixed assets to name a few. 

Accounting software helps you manage accounts, perform calculations and other financial operations with speed and accuracy but that’s as much as you’ll get out of it. To improve the efficiency, reliability and accuracy of forecasting and managing cash on a daily basis, you need AI-powered software that’s designed to automate the workflows involved in those processes.

Is Cash Forecasting Software Necessary?

Do you really need cash forecasting software? After all, you’ve depended on Excel spreadsheets forever. The ubiquitous tool is definitely useful in the initial phases of building a business. It’s fine for getting a business plan in order and forecasting expenses and income. 

Once you’re up and running, however, you begin to experience its drawbacks. Not only is it time-consuming to build out the spreadsheets, it’s stressful, prone to recurring errors and not conducive to showing a consolidated snapshot of your business. Bottom line, it requires a lot of manual effort and time to produce the financial reports you need for effective cash management.

On the other hand (no pun intended), software for cash management simplifies the laborious tasks and provides a wealth of benefits:

Fast invoicing and collections–automation speeds up the time it takes to create and send invoices which in turn accelerates payments from your customers.. 

Fewer late or missing payments–automatic reminders ensure that your customers are alerted in a timely manner so they don’t overlook a payment.

Higher productivity–free from having to complete time-consuming and tedious manual tasks, your finance team can use their time and expertise on high value items that contribute to the company’s growth.

Increased accuracy–automation means a reduction in human error that frequently occurs when data is input manually and compiled from multiple unconnected sources.

Real-time data–gathering data to produce financial reports can take days, and then at the end of the day the cash positions don’t reflect actual up-to-date values.

Lower costs–paper-based tasks cost more, both in the time it takes for processing and in the supplies and equipment needed.

Standardized processes–cash forecasting software is an efficient way to make sure that everyone on the finance team follows the same procedures and has access to the same information in real-time.

Single source of truth–having all data stored and accessible in one place keeps everyone on the same page which reduces inconsistencies and gaps in communication.

Enhanced customer service–customers appreciate the professionalism of accurate invoices and timely reminders. A self-serve portal that allows them to view their account information and make electronic payments has become the standard in customer service these days.

Features to Look For in a Cash Forecasting Solution

As you begin looking at different solutions, keep this in mind: Some software will include both features you need and features you have no use for. Don’t get distracted by bells and whistles and think that bigger is better. You’ll just end up paying a higher price for features that in the end won’t be useful.

  • Real-time data in a single view

Obviously, you want to choose software that will provide you with accurate and up-to-the-minute cash positions to improve your cash forecasting and cash management–it’s nice to have all this information on one screen.

  • Machine Learning (ML) and Artificial Intelligence (AI)

This feature makes a world of difference. ML and AI enable the software to provide cash projections for more accurate real-time forecasts, to identify risky accounts and to optimize payments.

  • Varied forecast timescales

Short-term, medium-term or long-term cash forecasts? You should be able to choose the timescale of your forecasts.

  • Customizable alerts

Find a software that allows you to customize notifications for your customers.    That way you’ll be better able to monitor payment terms.

  • Seamless integrations

The solution should integrate with multiple systems such as ERPs, accounting software and more. 

  • Automatic account reconciliations

This feature should reconcile your customers’ accounts and also your own bank accounts.Reduce manual inputs and take advantage of cash forecasting software that links to your bank accounts and automatically updates your cash flows.

  • Centralized database

Cloud-based solutions provide a way for you to view your actual cash flows in real-time from anywhere and anytime. This kind of accessibility gives you the most flexibility.

  • Fraud detection and prevention

This goes without saying, but make sure to ask about the security of your data. It’s easy to assume that financial software would have the highest of security measures in place, but that might not always be the case.

  • Intuitive and user-friendly interface

The software you’re going to work with everyday should be easy to use and visually appealing with screens that aren’t cluttered.

  • Automatic segmentation

It’s helpful if cash transactions can be automatically organized by categories such as AR, AP, payroll and taxes.

  • Multiple users

Does the software allow you to give access rights to a number of users at different levels?

  • Multiple entities

If your business includes several separate entities, make sure you can manage them all with the cash forecasting software.

  • Multi-currency

Depending on whether you currently do business globally or plan to in the future, it could be important to choose software that automatically handles different exchange rates and fees.

  • Self-serve portal

Providing a way for your customers to view their account and make electronic payments is more than a nice-to-have. It’s a must.

  • Customer service

Although customer service is not usually thought of as a feature of the software per se, it is an aspect you want to carefully consider. Yes, the solution is user-friendly and you’ll receive training, but most likely there will be times when you need support from your provider. How responsive are they? Do you communicate well with each other? It’s perfectly acceptable to include this “feature” in your comparisons.

Use this list of features to guide you as you look at different cash forecasting solutions and you can make a decision with confidence. But there’s still one last and critical step to take. You need to see the cash forecasting system in action.

After you’ve narrowed down your choices to a few, set up demos so you can experience how the different solutions feel firsthand. Don’t let this be a solo experience either. Have several team members in on the demonstration and encourage questions.

Cash forecasting software is a game-changer for CFOs and finance teams, especially if the solution leverages ML and AI like Payference does. Our cash forecasting software is designed to give mid-market businesses the same benefits that enterprise level businesses enjoy–without all the extras they don’t need.

If you’d like to see how Payference works, reach out today. We’re happy to answer your questions and show you how uncomplicated cash control can be.