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Significance of investing in Accounts Receivable Forecast


Significance of investing in Accounts Receivable Forecast

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As cash is central to everything an organization does, it’s right that companies devote time and effort in creating accounts receivable forecast, especially during these times of uncertainty with higher interest rates and inflation.

A complex financial instrument known as a treasury management system helps businesses manage financial risks effectively, maximize liquidity, and streamline cash flow. It is a one-stop shop for strategic financial management.

However, over time most organizations have created a Frankenstein of forecast methodologies. Each one made sense at the time and for their own reasons but left most finance teams without a single clear, actionable view of realistic future cash flows.

Accounts receivable forecast are generally proactive, with forecasts built using transaction data from banks and internal sources. Forecasts designed to manage investor relations tend to be more reactive, relying on retrospective data from published financial statements.

Improved Forecasting

Cash forecasting has always been more of an art than a science but it doesn’t have to be that way. With accounts receivable forecast tool, business owners are no longer dependent on their team’s tribal knowledge to know when to expect an invoice to arrive. They can leverage the tool’s AI/ML capabilities to project, without human biases, more accurately when an invoice can be expected.

A tool will also eliminate the repetitive manual processes of ERP report downloads and spreadsheet manipulation currently needed to update the forecast each time. So now, one can leverage science to enable them to make accurate forecasts with confidence.

Strategic Focus

Let’s be honest, not all customers or invoices are created equal. There’s always going to be a population of customers or invoices that one wants their team to focus on because they have an undue impact on their organization’s performance.

Without accounts receivable forecast automation, finding that bandwidth is always going to be a struggle and too often they will not have the necessary time to give those efforts the love they deserve. With the reduction of manual processes, the team will always have the time to concentrate on those customers and invoices that will move the needle in the right direction.

Scaling Efficiently

Historically business growth resulted in more customers and invoices (a good problem to have). Unfortunately, that also meant that business owners needed to increase their team’s size to keep up with the growing volume of manual work.

With accounts receivable forecast they can break that direct correlation by leveraging process efficiencies and effectiveness. Thus, allowing for mitigation needs for additional staff as they scale, making them a hero with their organization’s leadership.

Excellent Customer Communications

By streamlining the manual processes historically needed to send invoices and dunnings notifications organizational team can communicate with more customers, more frequently with a personal touch.

Accounts receivable forecast automation can generate personalized & situational-specific emails to thousands of customers in the time it would take to manually reach out to just tens of customers. This will ensure that business owners stay in front of their customer’s team and every invoice is followed up on without burying their team in tactical drudgery.

Customer & Employee Experience

The two greatest assets for business owners are their customers and employees. In a non-A/R automation environment, their A/R team is going to be overworked and underappreciated because they don’t have the modern tools and resources needed to be successful.