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How to Find the Most Accurate Cash Forecasting Platform

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Trying to find the most accurate cash forecasting platform begins with first having a clear understanding of the specific needs of your business. Then it’s important to understand exactly what it is that cash forecasting software should include in order to provide the highest level of accuracy.

After you’re up to speed on both, it’s a straightforward process of comparing different solutions to see how they stack up against each other.

When it comes to knowing what enables a cash forecasting platform to provide the most accuracy, like the majority of mid-market businesses, you probably need a little guidance. There are quite a few on the market and many of the most popular ones are so similar it can be confusing if you start your search without some education. 

In this blog, we’ll explain how cash forecasting software works, go over popular features and give you a few questions to guide your search. Before getting into the specifics of what makes an accurate cash forecasting platform, let’s make sure you’ve thoroughly examined what you need.

What Do I Really Need for Accurate Cash Forecasting?

As to the needs of your particular business, obviously the current size of your business is a given. You know the details around your plans to scale in the future. So based on those known factors, you may think you already have a good idea about what your finance team needs to function more efficiently. 

Top of the list, they need automated accounts receivable processes to relieve them of tedious manual tasks and save time. 

With the time saved, those finance professionals you hired for their expertise and skills can focus on more valuable tasks than data input and preparing invoices for distribution. They can spend more hours on projects that will contribute to the growth of your business and provide you with actionable insights based real-time cash positions.

And you may be right. But it’s always a good idea to check in with your finance team members. As the ones who will actually be using the cash forecasting platform on a daily basis, their opinions and insights are too important to be ignored.

Find out what they think are the top challenges that an automated AR platform can help with. Ask them what’s most frustrating, difficult or time-consuming about the job. Are there certain tech tools they’re familiar with that would streamline their workflows and accelerate collections? 

While you’re synthesizing their input with your original list, it’s also critical to keep your collections strategy in mind. No doubt your chief goal is to expedite the collections process to increase cash flow. But in tandem with that objective you most likely have a strategy for collections that aligns with your overall business goals and values.

For example, if increasing payments is the focus, then you will want to make sure any cash forecasting platform you’re considering offers robust features to support that goal. You would need a solution that invoices, sends reminders at critical intervals, offers multiple payment options and has the ability to track paid and unpaid invoices.

But if retaining customers is a high priority, then you should look for a software solution that also enhances strong customer relationships by improving the customer experience with customization, a self-serve portal and several options for communicating with your customers.

As you compare platforms, at first glance many will appear to be much the same. But when you look at them with your specific business needs and collections strategy in mind, you’ll begin to notice the details that point to the one that will best suit your needs.

Taking a Closer Look at Cash Forecasting

First, you should be aware that cash forecasting platforms can include solutions that may also be labeled as automated AR software, so if you’re Googling product options don’t limit your search to the term “cash forecasting platform.” Looking up some variation on “accounts receivable automation” can introduce you to plenty of options that all have the benefit of improving the efficiency of your receivables workflows and increasing your cash flow.

But you’re not interested in simply streamlining your AR process. Your focus is on finding the most accurate cash forecasting platform. And that means you need to narrow your search down to software solutions that leverage machine learning (ML) and artificial intelligence (AI).

It’s these advanced technologies which sound like something from a sci-fi film that enable a solution to provide real-time cash positions–and that’s the key to accuracy. So not only do these AI-driven digital tools automate your accounts receivable process to make the tasks of invoicing, collecting and reconciling accounts more efficient, they can learn from your historical data to predict cash flow more accurately, enabling you to optimize your working capital and minimize the risk of a shortage of cash. 

Features to Look for in a Cash Forecasting Platform

Powered by ML and AI

First and foremost, make sure any software you’re considering leverages these two technologies to provide you with cash projections for more accurate forecasting. ML and AI also can identify risky accounts and help you optimize payments by bringing them closer to terms.

Single view of real-time data

For ease of use and increased efficiency in forecasting and cash management, look for software that provides your up-to-the-minute cash positions all on one screen.

Varied forecast timescales

The best platforms will provide flexibility by giving you the option of choosing between a variety of timescales for cash forecasting: short-, medium- or long-term.

Customizable notifications

Being able to customize alerts and other customer communications is a feature that improves the way you monitor payment terms and relate to customers.

        Seamless integrations

The whole process of implementing a cash forecasting platform will be easier if you choose one that integrates with your existing ERPs and accounting systems.

Cloud-based 

Having your data in the cloud keeps everyone working from the same real-time information and offers the flexibility to view your cash positions and other data from anywhere at any time.

Automatic account reconciliations

It’s best if you find a software solution that will reconcile your customer accounts as well as your own bank accounts. This reduces manual inputs and increases accuracy.

Intuitive interface

Your finance team will be working with this software every day, so it should be easy to use and feature clean, uncluttered screens.

Automatic segmentation

Most users will find it helpful if the software automatically organizes cash transactions into categories such as AR, AP, payroll and taxes.

Multiple users

Find out if the solution allows you to grant access to a number of users at different levels and if there’s an extra fee for adding users.

Multiple entities

Especially if you plan to expand business in the near future, make sure that managing several separate entities is easily doable with the solution.

Multi-currency

As important as being able to manage multiple entities is the ability to handle different exchange rates and fees.

Customer self-serve portal

Customers are beginning to expect more from those they do business with. They want to be able to make electronic and other forms of payment on their own time and view their account without having to make a call or email you.

Questions to Guide Your Search for the Most Accurate Cash Forecasting Platform

After you’ve made sure the platform has the features you need, round out your comparison process by learning the answers to the following questions.

1) Is the platform intended for a specific industry or business size?

Although there are some products that are best suited for certain sectors, it’s more important to find a solution that’s designed for the size of your business–and still offers scalability. If you’re a mid-market size business, you most likely don’t need all the extras that a platform designed for enterprise level businesses includes. You’ll be complicating things and paying more for features you won’t use. 

2) Does the platform take into consideration the compliance and legal standards that impact my business?

For several industries and locations, there are regulations around collections and data management that must be followed or you risk paying hefty fines. Also, accounting and collections may have differing guidelines for customers who are business entities vs. customers who are individuals. If your business must comply with consumer laws or certain industry regulations, make sure the platform you’re looking at takes these into consideration.

3) Is there a demo and/or a sufficient trial period?

Set up a time for several members of your finance team to see a demo so they can see exactly how the platform works and ask questions. It’s also a good idea to use the same set of KPIs when you compare different products:

  • Accounts receivable aging
  • Average days delinquent
  • Average collection period
  • Day sales outstanding
  • Receivables turnover ratio
  • Total amount recovered

4) How is customer support delivered?

Some platforms offer support 24/7 through a combination of email, phone or chat. Get the details on how you will get the help you may need and the timeframe in which you can expect answers.

Accurate Cash Forecasting with Payference

AI-enabled Payference is quickly becoming the preference of mid-market finance teams. They appreciate how automated workflows decrease manual tasks, reduce errors, increase accuracy and improve cash flow. They also value how AI technology provides them with real-time visibility into cash positions for more accurate cash forecasting and improved cash management.

Still have questions? We’re happy to have a conversation or set up a demo. Reach out today!