Hindered by a lack of both time and resources (financial and headcount), small businesses often struggle to manage their finances effectively. This is where cash forecasting software for small business comes to the rescue. By combining the efficiency of automation with the power of advanced technologies, forecasting solutions not only ease the strain on finance teams, but they provide businesses with real-time financial information to help them optimize their working capital and make other critical business decisions.
Driven by machine learning (ML) and artificial intelligence (AI), these cash forecasting software solutions give small businesses the tools and insights they need to manage their cash more efficiently, streamline their AR and AP processes and predict their future cash flow with more accuracy.
In addition, because forecasting software gives you real-time cash positions, you can make decisions based on actual data rather than numbers that were manually gathered and analyzed days or even weeks ago. Beyond reducing the many time-consuming manual tasks that your finance team must complete every day, forecasting software offers benefits that small businesses, in particular, need for sustainability as well as growth.
In this blog, we’ll discuss the top five benefits of using cash forecasting software for small businesses. If you’re a small to mid-market business, read on to learn how easy it is to significantly transform your business and enjoy:
For too long, the benefits of a forecasting software for a small business were only available to finance teams in enterprise level organizations that had the resources to ditch their spreadsheets and other manual processes. The automation solutions they used also leveraged ML and AI for improved cash management and more accurate forecasting.
Fortunately, the times have changed. Now small businesses across all industries have access to these same kinds of technology at a price they can afford.
The faster you can get an invoice out to your customer, the faster it can get paid. Without automation, your AR process operates sluggishly due to all the manual paper-based tasks that need to be completed. First, a member of your finance team must gather and input data, including any special payment terms, to create an invoice. Then invoices are mailed, and it’s not until days later that your customer even has the opportunity to view and pay it.
Cash forecasting software speeds up invoicing with automation. Data is digitally captured to create invoices and get them sent to your customers in a fraction of the time it takes a human to complete the process. Additionally, automated invoices will have far fewer errors, so there won’t be any costly delays during the approval process–the invoices are ready to be paid.
Another way that cash forecasting software helps accelerate collections is by making the payment process more convenient for your customers. By giving them multiple payment options and a customer self-serve portal, you eliminate many of the obstacles to receiving timely, seamless payments. Customers like the ability to view their account and find the answers they need without having to contact you directly.
Cash forecasting software for small business is a better way to keep your DSO under control and your cash flow healthy.
While there’s no doubt that automation streamlines your accounts receivable process, the efficiency gained is not just about shortening the time between invoice creation and payment. The time saved by having all those tedious, repetitive tasks automated (including account reconciliations) results in your finance team being freed up to focus on higher value tasks.
They can use their talents and expertise to contribute to the growth of the business, work on special projects and reach out to customers. Of course in some cases adding cash forecasting software may mean that headcount on the finance team can be reduced, but most of the time it means that your finance professionals will have the opportunity for more strategic work that they find challenging. Team members who are satisfied with their jobs bring more to the table and tend to stay there longer too.
Replacing manual tasks with automated processes boosts your finance team’s productivity, value and job satisfaction.
Today, more than ever, small businesses need to look for ways to cut costs and add to the bottom line. And although cash forecasting software is in itself a cost, it has the potential to result in a significant ROI by decreasing your costs, helping you avoid unnecessary fees, unlocking hidden cash and retaining customers.
The first and more obvious savings come from cutting out the direct cost of manual processes: paper, ink, envelopes, postage, equipment and storage for all those files and documents. More savings are found by eliminating the times someone has to chase down and correct the errors that inevitably occur when humans are responsible for data input. You’ll also be able to cut down on the time you have to spend dealing with late and overdue payments.
Here’s another cost-cutting benefit. As your business grows, you most likely won’t have to grow your finance team to keep up with the added work. Cash forecasting software makes it easier to scale without increasing headcount.
Secondly, by prioritizing your payables and determining the best time and terms for your suppliers, the software helps you avoid late payment fees, interest charges and other costs associated with poor cash management–all tactics that improve cash flow in the process.
Next, the right forecasting software can help you identify idle cash–the cash that’s sitting in accounts and not working for you. When you have excess cash, whether you’ve held back too much for unexpected expenses or failed to accurately predict future inflows, it’s costing you in diminished value and lost opportunity. AI-enabled software can unlock hidden cash so you can use it to your advantage.
Finally, you can’t overlook the cost of losing customers–current or prospective. Today’s customer wants the ease, flexibility and convenience of a self-serve portal and multiple payment options.
Cut out the direct and indirect costs that are a result of inefficient manual processes.
Accuracy is key when it comes to forecasting cash flow, and cash forecasting software can help you achieve it. Using AI technology the software can quickly predict future cash flow based on your historical data and current trends.
There are many reasons why finance teams find it difficult to produce accurate cash forecasts. Without the help of software, they have to spend days collecting data from disparate sources. When data has to be compiled from random files, error-prone spreadsheets and accounting systems, the likelihood of additional inaccuracies and omissions is high. Then the team must spend even more time on calculations, analysis and the preparation of their reports. It’s a lot of time and effort to produce a forecast that’s based on cash positions that aren’t up-to-date.
With automation and AI technology, you’ll be working with reliable, real-time cash totals that are derived from one integrated source. And as you measure the accuracy of your forecasts, they will grow more useful over time.
Cash forecasts are more accurate and useful when they’re based on real-time cash totals.
Another advantage of cash forecasting software is that it enhances decision-making by providing real-time data and insights about a business’s financial position. It can provide up-to-date information on cash flow, inventory, accounts receivable, and other factors that affect the financial health of a business.
With a clearer picture of your current and future cash flows, you can make informed decisions about investments and expenditures. You’ll be in a better position to ensure that you have the resources you’ll need to grow and succeed.
Accurate cash flow predictions allow you to plan ahead and prepare for any potential financial difficulties. This can help you avoid unexpected cash flow shortages and costly mistakes.
In a nutshell, cash forecasting software can bolster your confidence. Armed with cash forecasts that you trust to have a high level of accuracy, you’re able to make decisions quickly without wasting a lot of time second guessing yourself.
Cash forecasting software enables you to make decisions based on real-time data and more accurate projections.
Cash forecasting software is a valuable tool for small businesses. It speeds up invoicing and payments, streamlines AR and AP processes, improves cash flow and the accuracy of your cash forecasts and gives you real-time data for better decision-making.
Payference is a cash forecasting software solution especially designed for small to mid-market businesses. Intuitive and easy-to-use, our platform integrates easily with your ERP/accounting systems, bank and payment channels and offers all the features and tools you need to effectively manage your cash all in one place.
If you have questions or would like to see how Payference works, reach out for a demo.