Cash flow forecasting is critical for many organizations as it provides more tangible insights into how the business will perform in the short- or long term. A recent study by AFP revealed that cash flow forecasting is the number one priority for 68% of treasurers in 2022. The survey also revealed that the majority of treasurers are increasing their preparedness for different types of scenarios because we have been living in uncertain times over the past few years.
Even though cash flow forecasting is a priority for most treasurers, it also comes with some challenges. One of the main challenges is struggling to consolidate cash flow data from different systems efficiently. Many treasurers are still manually collecting cash flow forecast data from multiple source systems into Excel - this process is inefficient and prone to error.
To help streamline the cash flow forecasting process, companies opt for a solution that can help automate data consolidation and some solutions even put the data in the proper reporting formats. But with so many solutions on the market, which one should you select? And what do you need to consider when choosing one? We have listed some recommendations and our top 10 best cash flow forecasting solutions for 2023.
Why do companies use cash flow forecasting solutions?
For most companies, cash flow forecasting becomes too complex when they increase in size. They have multiple banks, numerous bank accounts, large teams, several business units, different currencies, and several systems (ERPs, financial systems, etc.). The manual cash flow forecasting process becomes nearly impossible in such a scenario because there is too much to consider. Cash flow forecasting software can help to connect all systems and teams by automating data collection and utilize the information for actionable insights. This allows companies to increase their efficiency in the process and improve cash flow forecasting accuracy.
What makes a good cash flow forecasting software?
With numerous solutions on the market, you need to be selective and explore only those solutions that match your specific business needs. To help you out, we have listed some things that companies typically consider when looking for excellent cash flow forecasting software.
Integration and connectivity
The first important question you must ask yourself when comparing different vendors is how the solutions integrate into your existing technology stack. If you already use technologies like ERP or other financial systems, it is crucial to ensure that the new solution can integrate with that system with effortless data transfers. The best solutions do so without requiring an IT team to get involved.
Another topic you need to discuss with potential vendors is how they connect their systems to different banks. There are various connectivity alternatives (e.g. host-to-host, local connections, SWIFT, etc.) as to how you connect to banks. You should ensure that the vendor can deliver all your required bank connections and possibly set up new ones when needed.
Cloud-based services have taken over the cash and treasury management vendor market for a good reason. The cloud provides excellent security and provides real-time insight into current statuses. In addition, maintaining and updating functionalities in cloud-based solutions is handled by the vendor. Most importantly, cloud solutions allow better collaboration possibilities within your team and give you more control over the solution and the data to make sure that you comply with regulations.
Look at the user experience when you are choosing cash flow forecasting software. Many solutions offer similar functionalities but can have varying user interfaces that affect the ease of use. When shortlisting solutions, ask for product demos and include all your key stakeholders to examine whether a solution’s usability suits your team.
On top of all functionalities and technicalities of solutions, you should explore the service level agreements of vendors. The vendor's support during the solution's implementation phase is a must. In addition, you want to ensure that you receive some service from the vendor afterward in case of any issues.
The best cash flow forecasting software 2023
The following solutions are not presented in any particular order.
- Coupa Software
Nomentia is a company headquartered in Finland. They offer a wide range of treasury and cash management solutions, but you can only choose the modules you need. Nomentia Cash Flow Forecasting is a solution that automatically develops cash flow forecasts based on consolidated global cash flow data from all your groups and systems, including ERP systems, banks, treasury management systems, balance sheets, and P&Ls.
Based on the combined data from different sources, manual inputs, and historical patterns, Nomentia starts running forecasts at any time horizon and with different scenarios. You can also run variance analyses to see how accurate predictions have been.
Nomentia uses predictive analytics, seasonality trends, and industry indices in cash flow forecasts to get the most accurate outcomes. Some of the prediction models that Nomentia offers are TBATS, Support Vector Machine, Linear Regression, Prophet, Bayesian Structural Time Series, Feedforward Neural Networks, XGBoost, and Robust Linear Regression.
All cash flow forecasting data is automatically reported and can be fully customized or standardized. The resulting data can also be drilled down to the tiniest details, such as a single payment.
An example of a customizable and interactive reporting dashboard in Nomentia
Kyriba, with its headquarters in the United States, offers treasury management solutions. Customers of Kyriba can use the cash forecasting functionality as part of the cash and liquidity module to build and analyze cash forecasts at different timelines such as daily, weekly, monthly or yearly. They combine the data from multiple sources, including repetitive items, ERP data, and historical data. In addition, forecasts can be compared to actuals to help improve forecast accuracy.
3. Coupa Software
Coupa Software is a United States headquartered company. They offer forecasting as part of their more extensive treasury solution offering. Coupa’s solution will enable you to perform short, mid, and long-term liquidity projections, create several scenarios and analyze actuals versus budget. In addition, the tool consolidates group-wide forecasting data.
Serrala is a company headquartered in Germany. They offer different treasury management solutions. Part of their solution is the cash management and cash forecasting module that offers cash visibility into all relevant cash positions from various sources in a centralized place. The solution also enables categories for cashflow-based planning and scenario and simulation planning.
CashAnalytics is a company headquartered in Ireland. One of their leading solutions is cash flow forecasting. By combining the relevant data from different spreadsheets, banks, and ERP systems, you can easily model and drill down data within various reports and dashboards. The cash projection timeframe covers both short- and medium-term.
Highradius is a company that is headquartered in the United States. They offer a cash forecasting module for mid-market companies or a full treasury suite for enterprises. The cash forecasting module includes connectivity to ERP systems and banks, has a spreadsheet user interface, can do variance and scenario analysis, and allows easy collaboration and reporting.
TIS is a company headquartered in Germany that was initially heavily focused on payment solutions. They recently acquired CashForce, a company that specializes in cash flow forecasting. As a result, they also offer cash flow forecasting solutions to clients. Their solution CashOptix pulls data from different source systems to analyze short- and long-term cash positions. Drilldowns can be made to detailed levels, and variance and scenario planning can be done for any period of time. The results are visualized in reports.
8. ION Group
ION Group has its headquarters in Ireland. They offer a wider range of treasury management solutions. Part of it is a cash forecasting functionality that considers historical data and data from different sources to project future cash flows. You can compare the forecast outcomes to actuals and simulate cash flows for different scenarios.
Cobase, a company headquartered in the Netherlands, offers a treasury system with liquidity forecasting functionality. It helps organizations with short- and mid-term forecasting by combining data on cash flows, account balances, budgets, and transactions.
GTreasury is a company that has its headquarters in the United States. Their treasury management software includes a cash management product with cash forecasting. You can import multiple types of transactions to build daily, weekly, monthly, quarterly, or yearly forecasts. Actuals can be compared with estimated projections, and system connectivity allows you to import data from several systems.
Selecting the right software to improve your cash flow forecasting
The solution suitable for your team highly depends on your specific needs. So first, you can see the different solutions on each of the vendors' websites to see the capabilities. The next step would be to reach out to these vendors and ask for more information, service level agreements, technicalities, pricing, and a product demonstration. Based on that, you can make an informed decision on what solution can take your cash flow forecasting to the next level.