The Four Essentials Of Digital Cash Forecasting Methods in Treasury Management Learn about how to forecast cash flow more accurately. Our focus will be on forecasting cash inflow from Accounts Receivable (AR) which is the largest operational source of cash for most companies. Learn from our order-to-cash expert, John Salek about the key elements and tools available to greatly improve the accuracy and timeliness of cash inflow from AR. https://www.emagia.com/resources/ebooks/four-essentials-of-digital-cash-forecasting/ https://www.emagia.com/products/cash-flow-forecasting-software/

1. Four Essentials Of Digital
Cash Forecasting

2. • Introduction
• Cash Forecasting Overview
• The Essentials of Digital Cash Forecasting
• Customer Success Story
• Conclusion
• Your Questions
Agenda

3. 3
Introduction
• Accurate cash forecasting is a prerequisite for
excellence in cash management and for optimizing
short term borrowing/investing.
• The optimal cash forecasting capability must be tailored
to the individual company
• As with most business processes, the accuracy and
efficiency of cash forecasts can be greatly improved
using digital technologies such as machine learning and
artificial intelligence (AI)

4. 4
Cash Forecasting Overview
• Identify the components of cash flow
• Disbursements: payroll, payables, open PO’s, lease
commitments, capital investments, debt reduction
• Receipts: from AR, royalties, financing
• Determine where the data resides
• Select a Forecasting Tool
• ERP or “bolt on”
• Measure the accuracy, refine & improve
Cash forecasting is extremely time consuming if performed manually.

5. 5
Cash Forecasting Overview
• Receipts from trade receivables is usually the largest recurring
inflow and the most difficult element to forecast
• Digital tools improve accuracy, accelerate compilation of the
forecast and reduce effort so forecasts can be run as frequently
as needed
• Cash collection targets for all Collectors combined with a financial
incentive for achievement can also increase accuracy as target
setting improves over time
Our focus today will be on short term forecasting cash receipts from AR.

6. • Consolidation – across divisions and ERP’s
• Predictive Modeling
• Analysis and Simulation
• Tracking and Monitoring
The Essentials of Digital Cash Forecasting

7. 7
The Essentials of Digital Cash Forecasting
• Consolidation of all AR data:
• Interfaces with all division ERP’s – web & Excel interfaces
• Total Global view
• Predictive Modeling for Short Term Rolling forecasts:
• Uses Predictive Analytics to produce multi-dimensional forecasts of
AR collections at company, region, customer or collector level
• “Ideal” – collections per payment terms (no delinquency)
• Predictive Payment Behavior – per historical Average Days to Pay
with machine learning analytics
• Collector forecast based on Promises to Pay (PTP)
• Excludes disputes, credits, unapplied cash
Multiple ways to forecast cash receipts

8. 8
The Essentials of Digital Cash Forecasting
• Analysis & Simulation:
• Drill up and drill down capability (to individual invoice level)
• “What If” scenarios
• Real time rolling forecast windows
• Advanced statistics with machine learning
• Tracking & Monitoring:
• Variance analysis: forecast vs actual
• Comparison to budgets and goals
• Scorecards & dashboards
Tracking Actual vs Forecast is the Path to Improved Accuracy

9. Customer Success Story
Global Chemical Manufacturer
“Emagia has given us the consistency and control needed in our cash
flow processes. As a result, we have seen a decrease in DSO, a
dramatic improvement in cash forecasting accuracy, and have
established internal controls that helped us to easily pass our internal
audit for Sarbanes-Oxley compliance.”
– Global Head of Credit, Collections and Cash Management.
Key Client Benefits
• $3 million in interest savings.
• Cash forecasting accuracy improved by as much as 35%.
• Average past due balance dropped by $29 million compared to the
previous year.
• DSO reduced by 4.5 days.

10. Conclusion
• In the current economy, a company needs to
monitor its short & medium term cash
position closely.
• An accurate and efficient Cash Forecasting
capability is urgently required. Efficiency and
speed is critical as the forecast may need to
be updated frequently without diverting effort
from driving cash flow to predicting it.
• Digital Cash Forecasting can enable a firm to
meet the Cash Planning & Management
challenges posed by this economy.

11. Questions

12. If you have any questions or comments
about this session, please let us know
in the chat box or write to us at
info@emagia.com
Next Emagia Master Class Session:
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