![]() ![]() Key capabilities are extensive drill-down (to invoice and customer level) to understand details of the forecast, and robust “What If” simulation to understand the magnitude of the downside of inaccurate forecasts. This capability is used to verify the accuracy of the forecast and to understand and plan for substantial cash shortfalls. An alternative method is to use the aggregate cash collection targets established for the month. Accuracy depends on the quality and completeness of collector input. Collector forecasts, which is an accumulation of all “Promises to Pay” logged in the collections module.This yields high forecasting accuracy but requires the powerful computing power that digital technologies can provide. Both types of forecast utilize machine learning to continuously improve their forecasts. The other 20% is compiled using artificial intelligence to project payment date. About 80% of the cash flow forecasts are derived from the historical average days to pay. Predictive payment behavior which forecasts receipts at the invoice and customer level based on historical payment performance and predictive analytics.This serves as an upper boundary more than a forecast. “Ideal” which forecasts cash receipts if every invoice was paid on its due date. ![]() Best practice requires that forecasts be multi-dimensional that is forecast using different methods with the expectation that all the forecasts will converge on a narrow range of outcomes. This is the engine of cash forecasting using AI and ML. This can be very time consuming and requires significant elapsed time, which is a disadvantage when trying to react to new developments. Without it, finance staff will have to compile the forecast semi-manually using Excel cash flow forecasting model. A global view, displaying different currencies, is required. Automated consolidation of all data across units of the company (which may have different ERPs) is essential. Consolidation of AR data across divisions and ERPsĪccurate cash inflow forecasting for a company must include all cash.
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