Cash flow forecasting is not easy. You may be using the best cash flow forecasting system/package or service, but unless you understand the actual dynamics of cash flow forecasting and what to look for in your payables and receivables, you will do a ‘sub-optimal job’.
The well known Brian Shanahan, founder and CEO of Informita has launched BONAVIDO, which means “Good view” to help corporates improve their cash flow forecasting. He says they:
- want you to have a good view of your cash
- want to help you to have a better short-term cash flow forecast
- don’t do software, but they want to help your software provider get a better result for you
can set you on the right path.
The Bonavido methodology was developed by Informita while working with clients on their own short-term cash flow forecasting issues. The methodology has been thoroughly tested in many situations and in many companies.
Bonavido believes that the main problems with cash flow forecasting are that:
- there are potentially thousands of irrational behaviours going on simultaneously
- company’s business models are very different
- even the most powerful supercomputers would find the problem to be an immense challenge (and has a ‘throw-away comment’ that “For now AI in this spaces is just marketing spin”).
Shanahan believes that it is, “Critical is to test a range of potential algorithms to see which one is the best fit.” And to understand, “What can cause the cash forecast outliers.” He concludes, “Only then will you get accurate and plausible cash flow forecasts.”
CTMfile take: Cash flow forecasting is one of the most difficult processes regardless of which system or service you use. No wonder there are independent consultants providing advice and support on how to drive the modern cash flow forecasting systems and services. But what is the best combination??
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