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Cash Forecasting Has Evolved. Are You Ready?

  • By Nilly Essaides
  • Published: 9/25/2015
TIPCFCash forecasting remains one of treasury’s more challenging processes, in large part because it hasn’t been entirely automated. Most treasurers conduct their forecast manually, collecting some information directly from ERPs and the rest from other departments and bank accounts. The process can be time-consuming and resource heavy.

That’s why AFP’s latest Treasury in Practice guide focuses on cash forecasting, which has evolved considerably in recent years. With the market flush with liquidity, treasury’s focus is now on its ability to react to strategic initiatives that require tapping liquidity sources, such as strategic acquisitions and stock buyback programs. “Treasurers have to have a good handle on how much can they can fund from cash flow, and how much they need to turn to external sources,” said William Booth, head of national large corporate and specialty businesses, Treasury Management Division at PNC Bank. “Over a relatively short time, cash forecasting has shifted from a function of survival to the ability to be nimble and react to strategic opportunities.”

The new guide provides treasurers with best practices they can apply in this new cash forecasting paradigm. Hear from treasury practitioners and other experts on how to manage your cash flow expectations, regardless of your organization’s size and complexity.

Companies that forecast cash rigorously are able extend out the yield curve and create interest income even in a low-rate environment because they are better educated about their cash needs. “A lot of our peers are in money market funds and/or investing in government bonds and commercial paper under one year,” said David Neshat, treasurer of Akamai Technologies. “Our long-term forecast allows us to plan for and meet our buybacks and M&A requirements for more strategic uses of our cash.”

Download Treasury in Practice: Best Practices in Cash Forecasting here.

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