Cash flow forecasting best practices - new important suggestions
by Kylene Casanova
Cash & Treasury Management File’s item on cash flow forecasting best practices generated many hits and several Likes. Two readers suggested further best practices that they believe are vital.
Martin Sadleder, MD at Treamo Business Consulting wrote:
- the emphasis should be put on communication
- have the right people in the right place. If a member of staff is responsible for cash flow forecasting, they have to understand the business(es) and the practical implications.
- cash flow forecasting projects often fail, because they are reduced to filling in spreadsheets, a total waste of time and resources. If you want to implement successful forecasting, leave your desk, go to the people, learn their language (understand their business), translate your requirements into their language.
- once you have your forecast in place, be aware that this is just the beginning. Then you need to use scenarios & simulations to improve accuracy.
Krister Backlund, Senior Financial Consultant at Scandinavian Financial Solutions, wrote:
- follow up of quality on forecast and measurement must be top priority to achieve quality. One way can be to publish forecaster of the month on intranet and linking bonus to forecasting accuracy.
- ensure participants understand how the forecast is used is also very important. Not all in the organisation understand how the forecast is used in the daily Cash Management & Treasury activities.
CTMfile take: Excellent suggestions from two experienced cash management experts.
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