Brian Shanahan from Informita has found in his long career in working capital management that to produce accurate short term cash flow forecasts, it is not enough to rely on the actual dates in the A/R and A/P files from the ERP systems around the group. What is needed, he believes, is a whole range of techniques to adjust these dates and amounts based on:

• individual customer and supplier payment histories
• receivables: the pattern of supplier invoices based on receipt by value. (This will take account of invoices that are received after the payment due date.)

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Clearly this will improve short-term cash flow forecasting accuracy. But to do what Brian is suggesting is not easy, it will take a new type of solution to achieve this.