Is AI in Cash Forecasting just Hype?

In a recent conversation between Adi Barak, VP of Product at Panax, and Joel Jeselsohn, VP of Finance at Tangoe, the two finance experts dove deep into the challenges and opportunities facing finance teams around cash forecasting, especially for mid-sized global companies. They touched on topics such as the impact of inflation, the importance of cash forecasting, and the role of automation and AI in financial processes. Here are the main takeaways from their discussion.

The Case for Automation in Cash Forecasting

Both Joel and Adi stressed the advantages of automation in cash forecasting, pointing out that it minimizes errors, boosts efficiency, and allows teams to focus on higher-value tasks. Manual processes, such as data collection and tagging transactions, are time-consuming and prone to error. By automating these processes, finance teams can free up time for data analysis and decision-making, ultimately creating more value for their organizations.

Joel shared his own experience with automating Tangoe’s forecast, revealing that while their manual processes were “good enough,” automation took their forecasting to the next level. The shift allowed Tangoe to scale its operations without increasing headcount, improved team morale, and enabled the company to extend its forecast horizon from 13 weeks to as far as 12 months.

Managing the Risks of Automation

Despite the clear benefits, Joel and Adi acknowledged that automation comes with risks, such as the potential for low adoption and integration issues with existing systems. They recommended ensuring that finance teams remain hands-on, focusing on analyzing data rather than becoming too reliant on automation tools.

Another challenge is that forecasts are only as good as the data that goes into them. Automation tools should be carefully monitored to ensure that they accurately reflect the financial health of the organization, and finance teams must remain vigilant in identifying any potential errors or discrepancies.

AI’s Role in Financial Forecasting: Hype or Reality?

Joel and Adi both agreed that AI is not just hype; it holds real promise for improving financial processes, especially in forecasting. AI excels at analyzing historical data and generating projections much faster than human analysts. However, they pointed out that AI is not a replacement for human oversight, particularly when it comes to decision-making in unique or unpredictable situations.

For instance, AI might not be able to account for significant events like acquisitions unless explicitly programmed to do so. Where AI can add value is in running multiple scenarios simultaneously or predicting customer payment behavior based on past trends, providing finance teams with more accurate forecasts.

Measuring Forecast Accuracy and Reporting

When it comes to measuring the accuracy of forecasts, Joel stressed the importance of comparing actual results to the forecasts made weeks or months earlier. This approach allows teams to fine-tune their models, identify trends, and adjust forecasts as business conditions evolve. Accurate forecasting depends on regular evaluations and the ability to quickly pivot when unforeseen circumstances arise.

AI and Automation are the future of finance, but only when managed by the finance team, and not replacing the finance team.

As automation and AI become more integrated into financial processes, the role of finance teams is evolving. Rather than focusing on manual data entry and basic tasks, finance professionals are now empowered to focus on strategic analysis and decision-making. Both Adi and Joel made it clear that embracing these technologies is no longer optional—it’s essential for staying competitive in today’s fast-paced business environment.

Automation and AI offer finance teams the tools they need to navigate an increasingly complex financial landscape, but human oversight and expertise remain critical. As companies continue to adapt to this new reality, those that successfully integrate these technologies into their operations will be better positioned to thrive in a post-pandemic world.

Watch the full recording of the webinar here, or click here to download our e-book, for a deep dive into AI and Automation in Cash Forecasting. 

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