Hot on Cash forecasting

Every company should have access to an easy-to-use and fast-to-deploy cash forecasting solution. This Hot on Cash Forecasting blog will give you actionable insights and tips how to get your cash forecasting in shape fast and cost effectively.

I love efficiency and focusing on the essentials and hate hard-to-use software that I was forced to use in my work on a daily basis. As a protest against this, I started Exidio Ltd. in 2000 to create Trezone, the cash forecasting solution that was built from the ground up to be easy to use and fast to deploy.

Back then, this was a revolutionary idea in cash forecasting. And, rather surprisingly, it still is.

When the ownership of a company changes, operative cash flow often becomes more central for funding the business. This is why reliable cash forecasting is even more important than usually. In Case Seppälä, the new management bought an established clothing retail chain from a large conglomerate in the spring of 2015. Replacing the processes and systems of the former parent company was a big undertaking and required careful prioritization. One of the co-owners had considerable financial management experience and he raised cash flow forecasting high on the priority list. In this article, I will describe how Seppälä managed to fix their cash forecasting in just few weeks amongst all the other priorities.
In my earlier entries I have described how you can make reliable forecasts even if the information from you AR/AP systems is not very good. Last week I wrote about utilizing cash flow statuses in forecasting. Both of these processes involve handling overdue payments. If overdue amounts are just discarded from your forecast, you cannot trust the numbers. In this entry, I will describe how you can make sure that unpaid overdue transactions are accounted for in your forecast.
One factor that can decrease the quality of your cash forecasts is treating all cash flows as equal in the forecast. If a rough sales estimate is left hanging in a short term cash forecast, the results are likely to be unusable. Below I will describe how you can improve the quality of your forecasts by categorizing cash flows based on their life cycles.
Last week I wrote about the challenges AP systems can pose for cash forecasting. Forecasting Accounts Receivables has traditionally been very challenging as there are far more uncertainties in them than in Accounts Payables. This blog entry addresses some of the typical AR forecasting challenges and gives some practical advice for solving them.
It might curb your enthusiasm in cash forecasting if you cannot get reliable cash flow information from your operative systems. In fact, some companies do not forecast cash flows at all since they cannot get reliable data from their AP/AR systems. In this entry, I will explain how you can fix the most typical problems relating to your AP system and increase the reliability of your cash forecasting significantly.
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Timo Hämäläinen
My name is Timo Hämäläinen and I am the CEO of Exidio Ltd. I have worked with the challenges of cash forecasting for the past 25+ years.