How To Make Cash Flow Forecasts More Accurate

Imagine: A globally operating SME headquartered in Europe is struggling to manage cash flow forecasts across its multiple markets. With operations in the US, Asia, and Africa, each region operates in different currencies, time zones, and economic conditions. The company's current cash flow forecasting relies on manually collecting cash flow data from siloed financial systems and banks, and on creating forecasts in Excel spreadsheets.

The company's finance team spends hours collecting and inputting data from various subsidiaries. Lack of visibility into global cash positions occasionally leads to cash shortages. Coordinating across time zones delays decision-making because different regions submit forecasts at other times, making it nearly impossible to get a comprehensive view of the company's global financial health.

This can't continue.

The post-pandemic shift in cash flow accuracy concerns

Recent global events, including the COVID-19 pandemic, geopolitical tensions, and supply chain disruptions, have significantly impacted businesses worldwide. Many companies have faced fluctuating demand, inflationary pressures, and rising costs, which have strained their financial stability. As a result, businesses are increasingly focusing on liquidity and the accuracy of cash flow forecasting to navigate these volatile market conditions.

According to surveys* conducted by Deloitte, PwC, and the European Association of Corporate Treasurers (EACT), liquidity management has become a top priority for financial leaders, with a marked shift toward greater visibility and global control.

Increasingly, companies are realizing that having an outdated or inaccurate cash flow forecast leaves them vulnerable. In the uncertain global market, the risks of sudden cash shortfalls, increased borrowing costs, or missed investment opportunities require a response.

Cash questions answered with forecasting

As the business environment grows more volatile, companies are asking critical questions about the reliability of their cash flow forecasts. Concerns about how accurately cash flow can be forecast across regions with different currencies and economic conditions are taking center stage. Questions such as "How do currency fluctuations impact our cash flow?" and "What tools can help us improve visibility across global operations?" have become increasingly urgent for companies managing complex financial operations.

Without reliable cash flow forecasts, companies may face liquidity crises, miss investment opportunities, or find themselves unprepared for sudden market shifts.

Key terminology explained

• Cash Flow Forecasting: is the process of predicting the movement of cash into and out of a business over a specific period of time. Cash flow forecasting helps businesses anticipate cash surpluses or deficits, ensuring they have enough liquidity to cover expenses and invest in growth opportunities.
• Liquidity: The availability of liquid assets (cash or readily convertible to cash) within a company. Liquidity ensures that a business can meet its short-term obligations, such as paying vendors or covering operating expenses.
• Scenario modeling: Scenario modeling is the process of simulating different potential outcomes based on varying assumptions (changes in sales, market conditions, or currency rates). It helps businesses prepare for a range of financial scenarios by understanding how different factors can affect cash flow.
• Variance analysis: The process of comparing actual cash flow figures with forecasted data to identify differences and understand why discrepancies occurred. Variance analysis helps businesses refine future forecasts by identifying the factors that led to unexpected outcomes.
• Predictive analytics: Advanced cash flow forecasting technology that uses historical data, trends, and statistical models to predict future financial outcomes. Helps businesses make more accurate forecasts by analyzing past performance and projecting future trends.
• Global Cash Flow Visibility: The ability of a business to see and track cash flow across all its global operations, including multiple regions, currencies, and bank accounts. Provides a consolidated view of the company's overall cash position, enabling better decision-making and financial control.
• Cash Shortfall: A situation where a business does not have enough cash to meet its immediate financial obligations.
• Cash position simulations: are simulations that project future cash balances based on historical data, forecasted transactions, and external variables (e.g., market conditions).

Cash flow forecasting: The process

The process of cash flow forecasting involves several essential steps to ensure accuracy and relevance.

1. First, data collection is crucial. Companies need to gather historical cash flow data, including payments, receivables, and bank balances, from various regions and systems.
2. Analyzing historical trends helps identify patterns in cash inflows and outflows, which are used to estimate future movements. This step may include examining seasonal fluctuations, recurring payments, and trends in customer payments.
3. Afterward, scenario modeling is conducted to simulate different outcomes based on variables such as sales performance, currency fluctuations, or changes in market conditions. These scenarios help businesses prepare for potential challenges and opportunities.
4. Variance analysis is another key step, comparing actual cash flows with forecasted data to identify deviations and adjust future forecasts accordingly. This process should be iterative, with frequent updates to incorporate the latest financial data and market developments.
5. Finally, reporting and communication ensure that forecasts are distributed to key stakeholders in the company, allowing them to make informed financial decisions based on the most accurate and up-to-date information.

Challenges of improving cash forecast accuracy

• Fragmented cash flow data: Global operations often rely on multiple financial systems across regions, which leads to disjointed data.
• Integration of evolving financial systems: As businesses implement new tools and financial infrastructures evolve, integrating data from different systems becomes increasingly complex.
• Manual processes: Collecting, importing, and exchanging data manually is time-consuming, labor-intensive, and increases the risk of human error in cash flow forecasting.
• Currency fluctuations and inconsistent reporting: Variability in forecasts due to exchange rate fluctuations or inconsistent financial reporting can result in unreliable cash flow projections.
• Lack of visibility: Companies often struggle to gain a consolidated view of global liquidity, which hinders their ability to make informed decisions.
• Delayed reporting and discrepancies: Comparisons of forecasts and actual cash flows are often compromised by delayed reporting or inconsistent data.
• Difficulty in managing liquidity: These challenges combined make it difficult for businesses to manage liquidity and plan for growth effectively.
• Data silos across departments: Different departments (sales, procurement, and treasury) may maintain their own financial data.
• Complex cash flow patterns: Businesses with complex payment terms, such as long sales cycles or delayed receivables.
• Limited use of Advanced analytics: Many companies still rely on basic forecasting methods instead of utilizing advanced tools like predictive analytics or machine learning.
• Changing market conditions: Volatile market conditions, such as sudden shifts in demand, supply chain disruptions, or economic downturns, can cause significant deviations from forecasted cash flow.
• Inadequate Collaboration: Poor collaboration between finance teams and other departments (like operations or sales) can result in misaligned assumptions.
• Over-reliance on historical data: Businesses often rely too heavily on historical data without accounting for changes in market conditions, customer behavior, or operational needs
• Time lag in financial data: Delays in receiving updated financial data from different regions or business units can prevent timely and accurate cash flow forecasting.
• Underestimation of External Risks: Businesses may underestimate external factors like geopolitical risks, interest rate changes, or shifts in regulatory policies.

Consequences of ignoring forecast accuracy

Neglecting accuracy in cash flow forecasting can lead to significant financial consequences, ranging from cash shortfalls to missed investment opportunities. In the worst-case scenario, inaccurate forecasts can lead a business to face a liquidity crisis. For example, a business might forecast sufficient cash reserves for a significant expansion only to discover, too late, that it lacks the liquidity to move forward with the investment. On the operational side, inaccurate forecasts can disrupt supply chains if vendors aren't paid on time, halting production or delaying shipments.

Shortcomings of traditional forecasting methods

While common, Excel-based cash flow forecasting templates and models are insufficient for handling the complexities of global cash flow forecasting. First, Excel lacks real-time data integration. Financial data from multiple bank accounts, regions, and entities must be manually collected. These forecasting templates also struggle to handle the sheer volume of transactions and the number of bank accounts involved in global operations, especially when banks are spread across multiple countries with different reporting standards. Excel is unable to efficiently process and integrate data from various systems. Scenario modeling, another critical aspect of forecasting, is limited in Excel, where running multiple projections and comparing different outcomes is cumbersome and time-consuming.

Making the case for Nomentia Cash flow forecasting

Nomentia helps businesses streamline cash flow visibility and data collection, making cash flow forecasts much more accurate. By integrating with financial systems, banks, and ERPs, Nomentia automates real-time data collection and reduces manual input and the risk of errors. This helps businesses consolidate their global cash positions, offering a clear view of all accounts and regions in one place. With predictive analytics, Nomentia improves forecasting by analyzing historical data and market trends, enabling businesses to predict future cash flows more reliably. Its scenario modeling feature enables companies to simulate different financial outcomes and plan accordingly.

Better, more accurate cash flow forecasting

Enhanced cash flow forecasting accuracy supports better financial planning and risk management by providing businesses with reliable insights into future cash positions. Accurate forecasts help companies anticipate cash surpluses or shortages, allowing them to allocate resources more effectively and avoid liquidity crises. By reducing uncertainty, businesses can plan investments, manage working capital, and optimize operational spending. Accurate forecasting also improves risk management by identifying potential cash flow gaps early, helping companies mitigate risks from market volatility, currency fluctuations, or economic downturns. This leads to more informed decision-making and strengthens the organization's overall financial health.

Accuracy is a capability, not a spreadsheet

Improving cash forecast accuracy is not about building a more complex model in Excel—it is about getting the underlying cash data complete, consistent, and timely across your banks, entities, and currencies. Once the foundations are in place, forecasting becomes a repeatable process: collect and consolidate data faster, run scenarios with confidence, learn from variance analysis, and communicate a forecast that stakeholders can actually act on.

If manual inputs and late submissions still support your forecasts, start by improving visibility and standardizing the process. With the right cash flow forecasting software in place, you can move from “best guess” forecasting to a living, decision-ready view of liquidity—so the business can act earlier, reduce avoidable risk, and plan growth with fewer surprises.

*Source: Deloitte Global Corporate Treasury Survey 2024 | PwC Global Treasury Survey 2025 | EACT Treasury Survey 2025