4 Cash Management practices for 2023

Artificial intelligence (AI) developments are increasingly being used in treasury functions to help automate various tasks, reduce human errors and, above all, improve processes.

AI and machine learning (ML) can provide treasury and other finance functions with insights and capabilities that are almost impossible to derive using manual methods.

There are already AI solutions for cash management that learn from an organisation’s cash flow history to make better cash flow projections, so treasurers can be more confident in their analysis and forecasting. Machine learning (ML) tools are also essential in detecting payment fraud, matching transactions with historical payment data to identify anomalies and prevent fraud.

As businesses continue to prioritise increasingly accurate cash forecasting, and fraud shows no signs of abating, the implementation of AI and ML solutions will undoubtedly be of great benefit in the new 2023.

I have mentioned it before, cash forecasting will be one of the key issues for treasury managers in 2023. Before the Covid-19 pandemic, treasury departments could produce a single forecast; after the pandemic and in a rapidly changing market with volatile conditions, treasurers need to be able to produce multiple forecasts based on different potential scenarios so that for each scenario we have the most accurate forecast possible.

Couple this problem of multiple scenarios and multiple forecasts with the fact that many cash management systems struggle to handle diverse data sets, and it becomes difficult for treasury to provide the business with a useful forecast. Only an automated API-based solution can provide the correct value in real time.

APIs are the most reliable way to unify data from multiple sources, as they allow data sets from multiple systems, such as TMS, ERP, purchase orders, invoices, banks, to be combined and processed to improve forecasting.

Liquidity planning is based on cash forecasting and is driven by data to project liquidity and model the impact of financial decisions, enabling treasury to optimise investment, borrowing and working capital. This helps to predict cash flow and determine how organisations can fund themselves and pursue new growth opportunities.

In such a volatile environment, it is therefore advisable to implement solutions such as Liquidity Planning or Liquidity Analytics.

Every year is unpredictable and we do not know how the environment will change a company’s financial functions, but increasingly there are better technology solutions and specialist consultants to facilitate these cash management practices to reduce the part that escapes the treasurer’s peace of mind.