Several decades ago, Excel was invented to process/model inputs and generate outputs. Today, it is still by far the most used technology to generate a cash flow forecast. However, as we strive to achieve better forecasting accuracy rates, our desire for automation and the seamless processing of FX hedges, liquidity borrowings and deposits have underlined the need for more effective modelling and increasingly powerful data processing.
The good news is that we’re at the forefront of that digital treasury revolution, or so-called ‘Treasury 4.0’. This means:
- Leaving the manual-driven Excel jungle behind us and adopting an automated, data-driven forecasting process
- Automating decision-making based on logic (rules that are within corporate policies), which will drive our liquidity and FX hedge usage
The cash flow forecasting challenge
Last year, multiple treasury surveys from sources including the Association for Financial Professionals, the UK Association of Corporate Treasurers, , PwC and Citi, concluded that cash flow forecasting remains the primary challenge for treasurers today.
What are the headaches behind the process? Why is it so difficult for a corporate treasurer to generate an accurate cash flow forecast? And do we currently have the opportunity to solve this challenge?