12 min

Mastering cash flow forecasting methods for strategic financial decisions

Author
Naomi Goldberg
Published
Dec 24
, 
2024

Key Takeways:

  1. The blog outlines 8 distinct cash flow forecasting methods, each suited to different business needs, including direct, indirect, and hybrid approaches.
  2. Reliable historical and real-time data is critical for generating precise and actionable cash flow forecasts across all methods.
  3. Selecting the right forecasting method based on specific business conditions, such as seasonality or economic shifts, enhances the relevance of financial insights.
  4. Automated tools and AI-driven solutions simplify the application of multiple forecasting methods, improving accuracy and efficiency for finance teams.

Whether managing a Fortune 500 company or a growing mid-market enterprise, maintaining a reliable cash flow forecast means you have the insights to make informed financial decisions. But with multiple methods available, in addition to deciding whether top conduct a direct or indirect forecast, how do you determine which one suits your organization’s needs?

This blog explores eight key cash flow forecasting techniques, their practical applications, benefits, and common challenges, so you can choose the best method that will improve accuracy, visibility, and strategic planning in your financial operations. Let’s get started.

Receipts and Disbursements Method (Including Ledger Unwind)

What it is

The receipts and disbursements method calculates cash inflows and outflows based on expected receipts (e.g., sales, interest income) and disbursements (e.g., payroll, supplier payments) over a defined period. It’s often paired with ledger unwind, where balances from the general ledger are adjusted to reflect anticipated cash movement.

Use Cases

  • Short-term forecasting when paired with detailed transactional data. 
  • Weekly or monthly cash flow tracking to ensure liquidity management. 
  • Businesses with stable, predictable cash inflows and outflows, such as subscription-based models or businesses with fixed payment schedules. 

Benefits

  • Provides a granular view of cash movements for precise short-term liquidity planning. 
  • Helps identify timing mismatches between cash inflows and outflows, allowing proactive adjustments that avoid cash shortages. 
  • Simplifies the reconciliation process by directly linking forecasts to general ledger balances. 
  • Enhances accountability across departments as it relies on accurate transactional data inputs from multiple sources. 

Challenges 

  • Time-consuming to implement and maintain, particularly in organizations with high transaction volumes or complex operations. 
  • Requires meticulous data accuracy and timely updates to keep forecasts relevant. 
  • May be less effective for long-term forecasting due to the dynamic nature of business variables and external factors. 

The bottom line: Finance professionals can leverage the Receipts and Disbursements Method for highly accurate, actionable short-term cash flow forecasting.

Rolling Forecasting

What it is

Rolling forecasting predicts cash flow by continuously updating forecasts to reflect the latest financial and operational data. Instead of being limited to a fixed period (e.g. a calendar year), rolling forecasts extend the horizon as time progresses, maintaining a constant forecast window (e.g., forecast for the next 12 months or four quarters). This method allows organizations to swiftly adapt to changes in market conditions and organizational performance.

Use Cases

  • Medium to long-term planning, especially in industries with fluctuating revenues or expenses. 
  • Organizations that prioritize agility and require frequent updates to their financial strategies. 
  • Aligning financial forecasts with strategic business goals, including investment planning and resource allocation.

Benefits

  • Provides greater flexibility and relevance by incorporating the most up-to-date data into forecasts, reducing reliance on outdated static projections. 
  • Enhances decision-making by offering a forward-looking perspective that adapts to shifts in business objectives and external market dynamics. 
  • Facilitates strategic alignment between financial planning and broader organizational goals, efficiently allocating resources. 
  • Encourages a culture of continuous improvement and vigilance in financial monitoring, fostering better responsiveness to risks and opportunities.

Challenges

  • Demands a high level of coordination across departments for timely and accurate data collection. 
  • Can be resource-intensive as frequent updates require advanced tools, processes, and skilled personnel to maintain accuracy and reliability. 
  • May become overwhelming for smaller organizations without the infrastructure to manage ongoing revisions and analysis effectively. 

The bottom line: By leveraging rolling forecasting, organizations can move beyond static, reactive approaches to financial planning and adopt a more adaptable framework that supports long-term growth and resilience. To maximize its effectiveness, businesses should invest in technology and analytics that streamline data management and forecasting processes.

Scenario Analysis and What-If Modeling

What it is

Scenario analysis and what-if modeling evaluate potential outcomes and prepare businesses for uncertainty. These methodologies create and analyze multiple scenarios, each based on different assumptions or variables to assess their potential impact on financial performance, operational capacity, or strategic goals.

By leveraging advanced modeling techniques, businesses can anticipate risks, identify opportunities, and develop contingency plans. Decision-makers can test the resilience of strategies under varying conditions, for more informed and agile responses to market dynamics.

Use Cases 

  • Businesses operating in volatile markets or those facing uncertainty regarding revenue streams, expenses, or external economic conditions. 
  • Useful for evaluating the potential impact of strategic decisions, such as entering new markets, launching products, or adjusting pricing structures. 
  • Commonly used in risk management to assess potential outcomes of market fluctuations, regulatory changes, or unforeseen disruptions. 

Benefits 

  • Provides a comprehensive understanding of potential risks and opportunities by analyzing diverse scenarios and their financial implications. 
  • Enhances decision-making by offering insights into best-case, worst-case, and most-likely scenarios, empowering organizations to plan for contingencies. 
  • Supports strategic agility, so businesses can identify and prioritize actions based on robust financial modeling and risk assessment. 
  • Encourages proactive management by highlighting vulnerabilities in cash flow under various assumptions, improving preparedness for adverse situations. 

Challenges 

  • Requires advanced analytical tools and expertise to build and interpret multiple scenarios effectively. 
  • Can create complexity in decision-making if scenarios are overly detailed or numerous, leading to analysis paralysis. 
  • Relies heavily on accurate data and realistic assumptions, as flawed inputs can undermine the validity of the analysis. 

The bottom line: By incorporating scenario analysis and what-if modeling into their forecasting toolkit, organizations can build resilience and adaptability, gaining a clearer view of how various decisions and external factors could impact cash flow. When combined with other forecasting techniques, this approach ensures a well-rounded financial strategy that accounts for uncertainty. 

Bottom-Up Forecasting

What it is

Bottom-up forecasting builds cash flow estimates from individual department budgets or projects, consolidating them to form a holistic view. This method is often used in conjunction with top-down forecasting, which starts with an overall target and then allocates resources to various departments or initiatives.  

Use Cases 

  • Businesses with a decentralized structure or those that want to align cash flow projections with specific business units. 
  • Organizations where departments have unique budgeting processes and can provide detailed forecasts for their areas. 
  • Large-scale projects or initiatives where individual budget components contribute significantly to overall cash flow. 

Benefits

  • Enables a more accurate forecast by incorporating data from multiple sources instead of relying solely on high-level projections. 
  • Encourages accountability and ownership at the departmental level, providing a greater sense of responsibility for meeting financial targets. 
  • Facilitates collaboration and communication between teams, fostering a more cohesive approach to cash flow management. 

Challenges

  • Requires coordination and consolidation efforts to ensure individual forecasts align with overall projections and assumptions. 
  • Can create redundancies or inconsistencies without standardized processes for budgeting and forecasting across departments. 
  • May not be suitable for organizations without well-defined budgets or where resources are not allocated by department.

The bottom line:  This dual approach enhances accuracy and ensures that both high-level strategic goals and detailed operational requirements align.

Top-Down Forecasting

What it is

Top-down forecasting uses company-wide revenue projections, applying general assumptions to estimate cash inflows and outflows.

This approach is great for organizations looking to establish a broad financial vision or evaluate high-level strategic goals. By starting with macroeconomic trends, industry benchmarks, and overall corporate objectives, top-down forecasting is a scalable framework that guides resource allocation and identifies growth opportunities.

Use Cases

  • Organizations wanting to establish long-term financial strategies or to evaluate the feasibility of ambitious growth targets. 
  • Leadership teams and executives to align cash flow forecasts with high-level corporate priorities and market expectations. 
  • Beneficial for quick decisions based on big-picture trends, such as entering new markets, pursuing mergers or acquisitions, or scaling operations.

Benefits 

  • Streamlines forecasting by focusing on overarching trends and priorities, reducing the need for making sense of detailed operational data. 
  • Aligns financial planning with strategic goals, allocating resources according to long-term objectives. 
  • Has a quicker turnaround time for creating forecasts, making it valuable in time-sensitive situations. 
  • Leverages external benchmarks and macroeconomic data, offering insights that extend beyond internal performance metrics. 

Challenges 

  • May lack the granularity needed to address specific departmental or operational nuances, potentially leading to inaccuracies.  
  • Relies on high-level assumptions, which can skew forecasts if assumptions are overly optimistic or misaligned with actual conditions. 
  • Could result in disengagement at the departmental level if teams are not involved in the forecasting process or do not feel their input is valued. 

The bottom line: Top-down forecasting is most effective when paired with complementary methods such as bottom-up forecasting. This dual approach alleviates the potential limitations of each method, creating a forecasting system that meshes strategic vision with operational detail. 

Trend-Based and Statistical Forecasting

What it is

Trend-based forecasting uses historical cash flow data to identify patterns and extrapolate future performance. Teams sometimes use statistical models like linear regression or machine learning in this approach.

This method is particularly effective for businesses with stable historical data, because it identifies seasonality, cyclical trends, and growth patterns. Incorporating external variables such as market conditions, economic indicators, or industry benchmarks enhances the predictive power of these models, making them essential for data-driven decision-making.

Use Cases

  • Businesses with consistent historical patterns, such as retail, manufacturing, or subscription-based services where cash flow trends are predictable. 
  • Effective for industries that experience seasonal variations or cyclical fluctuations, allowing businesses to prepare for peak and off-peak periods. 
  • Valuable for organizations seeking to integrate data-driven insights into their forecasting processes, particularly when managing complex datasets. 

Benefits 

  • Enhances forecast reliability by leveraging historical data and statistical models, reducing reliance on subjective judgment or assumptions. 
  • Identifies patterns such as seasonality or cyclical trends, enabling proactive financial management and strategic planning. 
  • Supports scenario analysis by adapting models to different conditions or external variables, offering a comprehensive view of potential outcomes. 
  • Provides a foundation for continuous improvement, as models can be refined over time to reflect new data and changing conditions. 

Challenges 

  • Requires access to high-quality, consistent historical data to ensure model accuracy and reliability. 
  • May involve a significant learning curve or investment in tools, software, or expertise to implement advanced statistical methods effectively. 
  • Relies heavily on past performance, which may not always predict future conditions, especially in volatile or rapidly evolving markets. 
  • Can become complex when incorporating multiple variables or external factors, increasing the need for specialized skills and oversight. 

The bottom line: By leveraging advanced statistical tools, trend-based forecasting can minimize biases and improve accuracy.

Budget Modeling

What it is

Budget modeling is a structured approach to financial planning that creates detailed, scenario-based budgets. It involves developing Financial projections that outline expected revenues, expenses, and cash flows over a specific period, using known variables and potential uncertainties.

Budget models can range from simple spreadsheets to complex, dynamic financial tools that incorporate advanced algorithms and predictive analytics.

‍Use-Cases 

  • Organizations that require a comprehensive breakdown of financial plans, such as startups drafting initial budgets or established firms planning for expansions. 
  • Project-based industries like construction, software development, or consulting, where precise cost control is critical. 
  • Non-profits and public sector entities that must align their budgets with specific funding sources or regulatory requirements. 

Benefits 

  • Provides a detailed and transparent framework for understanding financial constraints and opportunities, ensuring alignment with organizational priorities. 
  • Facilitates informed decision-making by enabling scenario planning and "what-if" analysis to assess potential outcomes before executing strategies. 
  • Enhances accountability and oversight by clearly delineating financial allocations, empowering teams to manage funds efficiently. 
  • Encourages proactive identification of potential risks, such as cost overruns or revenue shortfalls, allowing for timely mitigation. 

Challenges 

  • Developing and maintaining accurate budget models can be time-consuming, especially for organizations with complex operations or limited financial expertise. 
  • Over-reliance on static budget models may fail to capture real-time changes in the market or operational environment, leading to outdated assumptions. 
  • Requires cross-functional collaboration to ensure all departmental inputs and needs are adequately represented, which can introduce logistical complexities. 
  • Implementation of advanced tools or software may require significant upfront investment and training, straining short-term resources. 

The bottom line: This method allows organizations to simulate different scenarios, evaluate the financial impact of strategic decisions, and allocate resources effectively.

Driver-Based Forecasting

What it is

Driver-based forecasting identifies and models the key drivers of business performance. These drivers—metrics or variables directly influencing revenues, costs, or profitability—form the foundation of the forecasting process. 

By concentrating on these underlying factors, organizations can achieve a more actionable, dynamic view of their financial performance. Driver-based forecasting typically leverages advanced tools and data analysis techniques to connect operational activities to financial outcomes, so organizations can  quickly react to changing business conditions.

Use Cases 

  • Organizations operating in dynamic industries where rapid changes in demand, competition, or market conditions can impact performance. 
  • Businesses with complex, multi-layered operational structures, such as manufacturing firms or retail chains, where small changes in input variables can have a large financial effect. 
  • Scenario planning, allows companies to adjust forecasts based on fluctuations in key performance indicators (KPIs) such as sales volume, production costs, or customer acquisition metrics. 
  • Organizations seeking to align financial planning with broader strategic goals, ensuring decisions are grounded in measurable, real-world factors.

Benefits 

  • Improves forecast accuracy by focusing on the direct impact of specific, measurable drivers rather than high-level assumptions. 
  • Enhances agility by enabling organizations to quickly update forecasts in response to real-time changes in key variables. 
  • Facilitates better collaboration across departments, as teams can identify and monitor shared drivers that affect both operational and financial outcomes. 
  • Promotes strategic alignment by ensuring forecasts are closely tied to business objectives, such as growth targets or cost efficiency goals. 
  • Encourages a culture of data-driven decision-making by linking day-to-day operations to long-term financial results.

Challenges 

  • Effectively identifying the right drivers can require significant data analysis and domain expertise to ensure relevance and accuracy. 
  • Dependency on accurate, real-time data for drivers, can be challenging to obtain or maintain without robust technology infrastructure. 
  • Integrating driver-based models with traditional financial systems may involve significant time and resource investments and/or the need for specialized knowledge. 
  • Risk of overemphasizing certain drivers, potentially neglecting broader market trends or external factors that can impact performance. 
  • Complexity increases as organizations scale, potentially requiring continuous investment in tools and training to sustain the value of driver-based forecasting.

Driver-based forecasting empowers organizations to move beyond static, assumption-heavy methods, for a deeper understanding of what drives financial success. Incorporating detailed, data-driven insights into strategic planning helps businesses make informed decisions, adjust rapidly to challenges, and position themselves for long-term growth. When used in tandem with other methodologies, such as trend-based forecasting or budget modeling, driver-based approaches add significant depth and precision to financial management practices.

The bottom line: Rather than using static inputs, driver-based forecasting identifies key business drivers (e.g., sales targets, and headcount costs) to estimate cash flow.

Building a Future-Forward Cash Flow Strategy

Adopting the right cash flow forecasting method is not just about efficiency; it’s about enabling smarter, faster, and more strategic decision-making. As a financial leader, your ability to Implementing tailored forecasting approaches can drive your organization’s resilience and long-term competitiveness.

If you’re ready to upgrade your company’s financial forecasting capabilities, explore advanced AI tools that seamlessly integrate data insights, real-time updates, and scenario planning. A streamlined forecasting platform will save countless hours of manual work and ensure your forecasts remain accurate and actionable.

Panax offers exactly this. Panax’s Automation and AI-driven forecasting is streamlined, flexible and accurate. It’s easy to set up and use, even by lean teams, and uses a combination of ERP data, together with AI for accurate forecasting. Most importantly, Panax’s cash forecasting solution is flexible, so you can tailor it to your company needs, and also adapt the forecast manually, as needed. Panax’s forecast is also smart, providing you with strategic insights to help you optimize your company liquidity.

Ready to empower your finance team—start building more efficient and accurate forecasts today.

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Related Articles
Cash Forecasting
Direct vs indirect cash flow forecasting: which method works best for your business?

Direct cash flow forecasting, sometimes known as the 'receipts and disbursement method,' predicts future cash inflows and outflows by collecting expected cash receipts and payments over short-term periods, usually weeks or months. Focusing on detailed operational data such as customer payments and vendor obligations creates more precise direct cash flow forecasts.

How to Build a Direct Cash Flow Forecast

Step 1: Gather data on expected cash inflows like customer payments, loan proceeds, and other impending revenue sources.

Step 2: Identify all anticipated cash outflows such as supplier payments, payroll expenses, rent, utilities, and other cash expenditures.

Step 3: Create a weekly or monthly timeline to organize and sort cash inflows and outflows, marking expected dates. 

Step 4: Compile the detailed transaction data for each period to map out the expected cash movements.

Step 5: Analyze the specific periods of cash surpluses and deficits by comparing the total cash inflows against the total cash outflows.

Step 6: Adjust the forecast for any predicted changes in operational activities, pricing, or external factors that can influence cash transactions.

Step 7: Regularly review and update the forecasted data to ensure it aligns with real-time business activities and market trends.

Indirect Cash Flow Forecasting

Indirect cash flow forecasting uses historical financial statements to predict future cash flows. Examining the relationship between net income and changes in balance sheet accounts (e.g. accounts receivable and payables) provides an indirect view into cash inflows and outflows. Although less detailed than direct forecasting, this method captures the overall financial picture, while anticipating future cash needs.

For the indirect approach, you’ll likely use the following primary methods: 

  • Adjusted Net Income (ANI): This method begins with net income and adjusts it for non-cash items, such as depreciation and amortization. By reconciling these figures, ANI provides a clear picture of actual cash generated by operations, helping businesses create more accurate projections.
  • Pro Forma Balance Sheet (PBS): Here, you’ll use a forward-looking balance sheet to estimate future financial standing. By forecasting changes in assets and liabilities, PBS anticipates future cash flows and identifies potential liquidity challenges.
  • Accrual Reversal Method (ARM): This approach reverses accruals to convert accrual-based net income into cash flow. Noting the timing differences between earning revenues and incurring expenses aligns projected net income with the expected cash position.

To sum it up, direct forecasting relies on real cash flow data, although it’s less reliable in the long run as you’ll eventually run out of data. Indirect forecasting uses projected financial statements, which are helpful in long-term planning.

The direct method offers a detailed view of actual cash movements, making it ideal for short-term management, while the indirect method provides a broader perspective suitable for long-term strategic planning

How to Create an Indirect Cash Flow Forecast

Use the steps below to create an indirect cash flow forecast:

Step 1: Gather historical financial statements (e.g. historical income statements, balance sheets, and cash flow statements) going back at least 12-24 months. This information is the foundation of your forecast.

Step 2: Define the forecast period as monthly, quarterly, or annually, depending on your business's needs and the level of detail needed.

Step 3: Use your company's historical or projected income statement to Identify the net income figure for each period within your forecast period.

Step 4: Identify and adjust for non-cash items that affect net income but do not impact cash flow. 

Step 5: Analyze changes in working capital items (e.g. accounts receivable, accounts payable, and inventory) that can significantly affect cash flow. Calculate the change in each item for each period in your forecast. 

Step 6: Factor in capital expenditures (CapEx). These represent cash outflows for purchasing assets such as equipment, machinery, or property. Estimate when these expenditures will occur during your forecast period.

Step 7: Consider financing activities that affect cash flow, such as:

  • Include any loans or credit facilities that provide cash inflow
  • Principal repayments, which are cash outflows
  • Capital raised through equity issuances

Step 8: For each period in your forecast, calculate the change in cash by adding or subtracting the adjustments in steps 4, 5, 6, and 7 from the net income figure (step 3). The result is the net cash provided by (or used in) operating activities.

Step 9: Start with the cash balance for the first period in your forecast and calculate the ending cash balance for each period by adding the change in cash (step 8) to the beginning cash balance of that period.

Step 10: Regularly update and review your cash flow forecast through the forecast period. Compare actual results to your forecast, and make adjustments to reflect changes in business conditions, assumptions, or strategies.

Before selecting a method, it helps to familiarize yourself with the advantages and disadvantages of each option.

Advantages of the Direct Method

Simplicity: Directly recording cash inflows and outflows allows for straightforward tracking and an understanding of cash positions. 

Immediacy: The direct method captures real-time cash movements, making it ideal for preparing daily and weekly reports for short-term decision-making. 

Accuracy:  Businesses can gauge their liquidity with a bottom-up approach, minimizing errors that can occur in more complex forecasting methods. 

Small Companies: Its simplicity and transparency help entrepreneurs without extensive financial backgrounds to effectively manage their finances. 

Disadvantages of the Direct Method

Resource intensive: The direct method requires  detailed tracking of every transaction t. This level of detail can be time-consuming, especially for businesses with a large volume of transactions.

Short-term only: This method is less effective for long-term forecasting. It focuses on upcoming transactions which might not provide a complete financial picture over an extended period.

Non-Cash Transactions Overlooked: By focusing solely on cash transactions, Direct ignores non-cash factors, which can lead to inaccurate forecasts for businesses with more complex accounting structures. 

Dependency on Historical Data: Past data isn't always a reliable predictor of future conditions, particularly in rapidly evolving industries. Historical data means relying on indirect forecasting, which may not be able to adapt to market shifts or unexpected changes. This can result in cash flow mismatches.

Advantages of the Indirect Method

Longer-term view: The indirect method shows a long-term view of a business's cash flow, which is ideal for strategic planning. By starting with net income and adjusting for non-cash transactions, it offers insights into the broader financial impacts and sustainability. 

Understanding non-cash impacts: Incorporating non-cash transactions like depreciation and amortization provides deeper insights into your financial health. 

Accounts for future transactions: Using both historical financial data and non-cash adjustments gives you a better understanding of cash flow patterns and makes it easier to predict future financial transactions.

Disadvantages of the Indirect Method

Complex: Indirect cash flow forecasting is complex and often requires a deep analysis of financial statements, at challenge for those unfamiliar with intricate accounting methods.

Reliant on assumptions: The indirect method relies on estimates and assumptions, which can lead to inaccuracies if these assumptions do not hold.

Time-consuming: This method can be time-consuming, especially for startups or small businesses lacking comprehensive financial information or resources.

Not suitable urgent decision-making: It may not pinpoint short-term cash flow fluctuations accurately and can hinder rapid decision-making in pressing situations.

Criteria Direct Indirect
Data Source: Uses actual cash transactions Relies on accounting income and adjustments
Level of Detail: A detailed view of a company’s cash position as a broader perspective, focusing on overall financial health and strategic planning
Accuracy: High for short-term projections Varies, better for long-term forecasts
Complexity Simpler for businesses with straightforward transactions More complex due to multiple adjustments needed
Time Frame Suitability Best for immediate and near-term forecasting Ideal for long-term strategic planning
Forecasting Model Real-time cash flow tracking Uses balance sheet and income statement changes
Ease of Use Less burdensome for small businesses Preferred by larger entities with complex financials

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When to Use Direct vs Indirect Forecasting

Startups and Small Businesses: Direct forecasting can be beneficial for startups and small businesses that need immediate visibility into their cash flow. Since these companies often deal with short-term cash needs and have simpler financial situations, the direct method gives a clear picture of their actual cash inflows and outflows.

Manufacturing Companies: For industries like manufacturing—which has complex operational requirements and large volumes of transactions— indirect forecasting is more useful. This method helps businesses understand long-term financial health by analyzing comprehensive financial statements and adjusting for inventory, payables, and receivables.

Retail Chains: Large retail chains with predictable sales patterns might lean towards indirect forecasting. The ability to leverage historical data for accruals makes it easier to project future cash flows based on past trends rather than current transactions.

Project-Based Businesses: Companies engaged in project-based work, such as construction or consulting, can combine both methods. By using direct forecasting for specific projects and indirect methods for overall financial stability, they can effectively manage short-term project cash flow needs and long-term financial planning.

Real Estate: Companies with multiple entities that heavily rely on cash, including real estate, hotels and other similar industries will combine a mix of both direct and indirect forecasting. Direct forecasting helps with day-to-day and operational decisions, while indirect forecasting informs long-term strategy and investment planning.

Other Factors to Consider When Choosing a Cash Flow Forecasting Method

Beyond industry or your business’s size, you can also choose a method based on the following factors:

‍Your goals: Is your focus short-term precision or long-term strategy? If you need granular cash flow insights for day-to-day cash management, direct forecasting might be more advantageous. If you need a long-term financial strategy, indirect forecasting provides a high-level perspective.

The data you have: What quality and quantity of historical financial data can you access? Direct cash flow forecasting relies on real-time cash transaction data, which isn’t always readily available. If you lack direct cash flow data, indirect forecasting based on financial statements can be a solid alternative.

‍Consider your resources: Note your available resources for data management and financial modeling capabilities. Direct forecasting can be data-intensive and may require sophisticated cash management systems. Indirect forecasting isn’t as resource-intensive and doesn’t require as much data mining.

Define timelines: Define the timeframes and list short-term and long-term goals. Direct forecasting provides short-term precision, while indirect forecasting can shed insights useful for strategic long-term planning.

Which is Better: The Direct or Indirect Method?

Understanding direct and indirect cash flow forecasting methods is crucial for effective financial planning. Each method has distinct advantages and challenges, tailored to different business objectives. 

For more precise, day-to-day cash management, direct forecasting offers clarity and immediate results. If your aim is comprehensive financial reporting and strategic planning, opt for the indirect method. 

When choosing which method best aligns with your company’s financial goals, consider the size of your business, the level of detail you require, and the resources at your disposal. Evaluating these factors will help create a cash flow management strategy you can feel confident with.

Panax’s flexible AI and Automation based Forecasting

Panax understands that companies with lean finance teams and complex treasury needs want flexible, accurate forecasting. AI-driven categorization within the Panax platform means forecasts are more accurate, and you can compare forecasts to actuals for increased accuracy and reporting. 

Within the Panax platform you can choose weekly or monthly forecasting options, and combine forecasting for scenario planning. Panax allows you to create forecasts that automatically roll week/week or month/month based on updated actuals - allowing you to focus on gaining insights instead and making decisions instead of on data entry.

To get a personalized demo of Panax’s forecasting capabilities, sign up here.

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Naomi Goldberg
5 min
Cash Forecasting
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.

By automating cash forecasting processes, finance teams can free up time for data analysis and decision-making, ultimately creating more value for their organizations

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. 

‍

Naomi Goldberg
5 min
Cash Forecasting
What is cash flow forecasting?

Cash flow forecasting is the process of estimating the business’s future cash levels over a specific period of time. This financial management tool helps businesses anticipate cash shortages or surpluses, allowing them to make informed operational and strategic decisions.

By accurately predicting future cash levels, companies can ensure they have enough liquidity to meet their financial obligations, invest in growth opportunities, and avoid unnecessary borrowing costs.

Cash flow forecasting is a crucial financial tool that helps businesses predict their future financial position. By anticipating the inflow and outflow of cash, companies can better understand their future cash positions, enabling them to make informed strategic decisions. This forecasting ensures that funds are available to cover obligations as they arise, thereby maintaining liquidity and avoiding potential cash shortages.

Essentially, cash flow forecasting provides a roadmap for financial planning, enhancing a company's ability to navigate future financial landscapes with confidence.

Cash Flow Forecasting vs Budgeting

A cash flow forecast predicts when income and expense charges come in and out of the bank account. A budget helps plan resources and capital for a project or business objective.

Budgeting provides a detailed financial roadmap, outlining projected revenues, costs, and resources. In contrast, cash flow forecasting zeroes in on when exactly these financial movements will occur.

Though different in focus, cash flow forecasting and budgeting are complementary. Budgets set financial targets and allocation plans that cash flow forecasts monitor in real-time. By integrating both, businesses ensure they are not only planning their finances meticulously but also dynamically adapting to cash movements. This combination helps balance long-term goals with current financial health, for accurate financial decision-making and skilled strategic planning.

Real-World Example of a Cash Flow Forecast

ABC Inc. is a  small hardware store. ABC Inc. wants to estimate the cash coming in and going out for September to ensure they can cover all their expenses and plan for any unexpected costs.

They’ll start by listing their expected cash inflows. This includes:

1. Sales revenue: $25,000
2. Customer payments on outstanding invoices: $7,000
3. Investment income: $1,000

The total of the above figures gives ABC Inc. a total projected inflow of $33,000 for September.

Next, they list their expected cash outflows, such as:

1. Supplier payments: $10,000
2. Employee salaries: $8,000
3. Utility bills: $1,500
4. Rent: $3,000

Miscellaneous expenses: $1,000

The total projected outflow amounts to $23,500.

By comparing the inflows and outflows, ABC Inc. calculates a net cash flow of $9,500 for September, meaning the business will have a surplus, leaving room for investment or savings for unforeseen expenses.

ABC Inc. will continuously update their forecast as data comes in, allowing them to adjust their spending and prediction models to maintain healthy liquidity. This proactive approach helps them to smoothly navigate through financial uncertainties.

How to Create a Cash Flow Forecast

Creating a cash flow forecast involves several key steps:

1. Determine your forecasting objective
2. Choose forecasting period (short term e.g. 13 weeks or long term e.g. 12 months forecast)
3. Choose forecasting method (direct or indirect)
4. Source your financial data

See this article for a more detailed guide on how to build a cash flow forecast

Why is Cash Flow Forecasting Important

Cash flow forecasting offers several key benefits that drive business success. Here’s a list of reasons why this tool is important.

Improved financial planning

By accurately predicting future cash inflows and outflows, you can ensure that your business remains solvent and can cover its obligations. Financial planning enables precise budgeting and resource allocation to areas that promise the highest returns.

Risk management

With a clear picture of your cash flow, you can identify potential shortfalls well in advance. This proactive approach allows you to address issues before they become critical, whether by securing additional funding or strategically adjusting expenditures.

Better decision making

Equipped with detailed financial projections, you can make informed decisions such as when to expand, invest in new projects, or reduce costs. This not only supports growth but enhances your ability to respond quickly to changing market conditions.

Cash flow forecasting is a crucial tool that allows businesses to proactively manage their financial health. Whether it's allocating funds for new investments, paying down debt, or simply ensuring that all bills are paid on time, cash flow forecasting provides the clarity needed to make informed financial decisions.

Difference Between Cash Management, Cash Forecasting & Liquidity management

While interrelated, each financial tool has a distinct role in managing a company's cash and overall financial health. Let's break down the differences:

Cash management: This refers to the broad process of collecting, managing, and investing a company's cash and cash equivalents. The primary goal of cash management is to optimize liquidity, ensuring that the company has enough funds to meet its short-term obligations, while maximizing returns on any idle funds. Put simply,, cash management is about making the most efficient use of cash on hand.

Cash flow forecasting: Unlike cash management, which focuses on current cash, cash flow forecasting is future-based. It predicts the timing and amounts of future cash inflows and outflows based on historical data, market conditions, and business activities. Accurate cash flow forecasting is crucial for strategic planning and helps businesses anticipate funding needs, avoid liquidity shortfalls, and make informed decisions about investments and expenditures.

Liquidity management: This is the practice of ensuring a company can meet its short-term obligations and continue operations without financial stress. It encompasses both cash management and cash flow forecasting, but also includes managing other liquid assets that can quickly convert to cash. Effective liquidity management ensures that a business maintains sufficient cash reserves or access to capital to handle unexpected expenses or opportunities.

By understanding and utilizing these three financial strategies, businesses can maintain a robust financial standing, ensuring they are well-prepared for both current needs and future challenges.

‍

Naomi Goldberg
5 min
Working Capital
What is working capital management?

Working capital is the difference between a company’s current assets (e.g., cash, inventory, accounts receivable) and current liabilities (e.g., accounts payable, short-term loans).

The formula is simple:

Working Capital = Current Assets – Current Liabilities

Working capital management is the process of managing these resources to meet short-term obligations and remain operational.

Simple Example:

Imagine a small retail business. Their inventory (current asset) is worth $50,000, while their accounts payable (current liability) sits at $30,000. Their working capital is $20,000. If they poorly manage accounts payable or overstock their inventory, they risk liquidity issues that could jeopardize daily operations.

Why businesses need to manage working capital effectively

Proper working capital management ensures financial stability. It’s a balancing act—too much working capital may suggest inefficiency, while too little can lead to liquidity crises. Effective management provides the flexibility to meet immediate financial obligations and invest in growth opportunities.

The link to cash flow optimization

Working capital management is inextricably tied to cash flow. By optimizing accounts receivable, accounts payable, and inventory, businesses can accelerate their cash conversion cycle (CCC)—the time it takes to convert investments in inventory into cash received from customers. Essentially, a shorter CCC means smoother cash flow.

Impact on profitability and liquidity

  • Profitability improves as funds tied up in working capital can be reinvested into high-ROI opportunities.
  • Liquidity reduces the risk of insolvency, ensuring the company can cover its short-term liabilities.

How it works

  1. Monitor assets and liabilities: track cash, accounts receivable, inventory, and accounts payable. 
  2. Analyze ratios: use ratio analysis to measure working capital management effectiveness.
  3.  Make decisions: use the information to make decisions about short-term spending and debt. 
  4. Improve processes: use software to automate processes like invoicing and payments. 

Types of working capital

To create financial strategies tailored to your business, it’s critical to understand the different forms of working capital:

  1. Permanent working capital 

Permanent working capital is funds that are consistently required to support basic operational needs (e.g., maintaining inventory). These funds remain constant irrespective of fluctuations in business activity levels and are vital for sustaining long-term operations. Properly managing permanent working capital ensures the business operates smoothly even during periods of economic uncertainty.

  1. Regular working capital 

These are funds needed to cover routine operational expenses in running a business. Regular working capital is critical to maintaining liquidity and meeting short-term obligations without disruption.

  1. Reserve working capital 

Reserve working capital is funds set aside to address unexpected expenses or financial contingencies due to unforeseen circumstances. Maintaining adequate reserve working capital safeguards the business against potential disruptions and assures operational stability under challenging conditions.

  1. Fluctuating working capital 

Fluctuating working capital requires careful planning and monitoring to effectively allocate resources during peak and off-peak periods. Proactively managing these variations helps prevent cash flow issues and supports business operations.

  1. Gross working capital 

Gross working capital refers to the total current assets available within a business, including cash, accounts receivable, inventory, and other liquid assets. By effectively managing gross working capital, the organization has sufficient resources to meet short-term obligations while enabling smooth operational processes.

  1. Net working capital 

Net working capital is the difference between a company's current assets and current liabilities, which indicates financial health. Maintaining positive net working capital is essential for meeting short-term liabilities and supporting day-to-day operations.

5 Key components of working capital

‍To streamline working capital management, businesses usually focus on the following  critical elements:

  1. Current assets

Current assets encompass resources a company can convert into cash within a short period, typically a year. These assets include i) cash and cash equivalents ii) accounts receivable, inventory, and iii) short-term investments. Managing current assets is crucial for maintaining liquidity while covering immediate financial needs. These resources allow businesses to manage operations seamlessly, respond to market demands, and support growth opportunities. Proper oversight and optimization of current assets directly contribute to a strong financial position. 

  1. Current liabilities

Current liabilities include i) accounts payable and ii) short-term loans, which represent the company's immediate financial responsibilities. Accounts payable refers to amounts owed to suppliers or vendors for goods and services already received, while short-term loans typically involve borrowed funds that must be repaid within a year. Correctly managing these liabilities is essential to maintaining the organization's financial health and smooth daily operations.

  1. Net working capital formula

Net Working Capital = Current Assets - Current Liabilities

‍Net working capital is a critical measure of a company's short-term financial health, operational efficiency, and liquidity. A positive net working capital means that the company has enough current assets to cover its current liabilities, meet financial obligations, and invest in growth opportunities. On the other hand, a negative figure could mean potential liquidity issues and necessitate immediate attention to protect the business’s stability.

What should be excluded from working capital?

Items that aren’t part of a company’s short-term assets or liabilities are not part of working capital and include: fixed assets (e.g. real estate and equipment that can’t be converted into cash within a year, long-term debt and lease obligations that go beyond a year, retained earnings or common stock, and patents and trademarks).

‍
Benefits of effective working capital management

Why should organizations prioritize working capital management? Read on for the key benefits: 

Improved cash flow & liquidity 

Effective working capital management ensures a steady and reliable cash flow, allowing organizations to maintain liquidity for operational needs and unforeseen expenses. By optimizing receivables, payables, and inventory levels, companies can reduce financial strain and avoid costly short-term borrowing. This proactive approach not only supports day-to-day operations but also provides flexibility to take advantage of strategic investment opportunities that power long-term growth and stability.

Better risk management 

Effective risk management is critical for mitigating financial uncertainties and safeguarding organizational stability. By analyzing potential threats and implementing robust contingency plans, companies can minimize the impact of adverse events on their operations. Proactive identification and evaluation of risks allow businesses to allocate resources strategically, reducing exposure to volatility.

This structured approach enhances decision-making processes and promotes resilience, ensuring sustained performance even in challenging market conditions.

Enhanced operational efficiency 

Streamlining processes, optimizing resource utilization, and reducing redundancies across the organization enhance your operations, improve productivity, and create better outcomes.Through working capital management, your business can create clear workflows and continuously monitor performance to align operations with strategic goals. This not only drives cost-effectiveness but also allows the company to quickly adapt to market demands for long-term success.

Stronger supplier & customer relationships 

Maintaining liquidity to meet its short-term obligations via working capital management means you’re making timely payments and fostering trust with suppliers. This reliability strengthens partnerships, leading to better negotiation terms and consistent supply chains. Similarly, optimized working capital enables businesses to offer favorable payment terms to customers, enhancing satisfaction and loyalty.

By balancing cash flow, businesses can create mutually beneficial relationships that support long-term growth and collaboration.

Challenges in managing working capital

While the benefits are clear, managing working capital is not without challenges:

  1. Cash flow constraints 

Insufficient liquidity can lead to missed growth opportunities or delayed payments. Businesses often struggle to balance incoming and outgoing cash, particularly when dealing with fluctuating sales cycles or unexpected expenses. Additionally, relying on credit or slow-paying customers can exacerbate these constraints, straining operational efficiency.

  1. Over-reliance on credit 

Excessive dependence on short-term financing can lead to high-interest costs. This can reduce financial flexibility and leave your businesses vulnerable during low revenue periods. Furthermore, it can create a cycle of dependency that hinders long-term growth and hampers the ability to invest in strategic initiatives.

  1. Inventory management issues 

Poor inventory management disrupts cash flow, as excess inventory leads to increased holding costs, while insufficient stock can damage customer relationships and diminish brand reputation. Balancing inventory levels is critical to ensure liquidity and maintain operational stability. 

  1. Accounts receivable delays 

Late payments from customers hinder cash flow and operational agility. These delays reduce the funds needed for day-to-day operations and strategic investments. Prolonged payment cycles may also increase reliance on external financing, raising borrowing costs and financial risk.‍

Strategies for working capital management

‍To overcome these challenges, CFOs and treasurers can adopt some of the following strategies:

  1. Cash flow forecasting & budgeting 

Anticipate future cash needs to avoid shortfalls or surpluses. Tools like cash flow software can streamline projections. Regularly updating cash flow forecasts to align with changing market conditions and organizational priorities, for better decision-making. 

  1. Inventory control techniques 

Implement just-in-time (JIT) or ABC analysis to maintain optimal inventory levels. These methods minimize holding costs and reduce the risk of obsolescence while ensuring that stock levels meet demand. Regular inventory audits and leveraging software solutions can further enhance efficiency and accuracy in inventory management.

  1. Streamlining accounts receivable & payable 

Encouraging faster customer payments by offering early payment discounts, which improve cash flow and reduce outstanding receivables. Additionally, negotiating extended payment terms with suppliers gives you more financial flexibility and improved management of accounts payable.

  1. Leverage financial tools & technology 

Use automated solutions like supply chain finance platforms and electronic invoicing to improve efficiency. These tools streamline payment processes, reduce errors, and provide real-time insights into cash flow, fostering more informed decision-making.

Differences between related concepts

‍Lastly, it’s crucial to disentangle working capital management from related concepts:

Working capital vs. cash management 

Working capital compares current assets to current liabilities to understand whether the finance team can pay bills and other short-term liabilities. Cash flow measures the cash inflows and cash outflows, as shown in the cash flow statement. 

Working capital vs. capital budgeting 

Capital budgeting focuses on long-term strategic investments, while working capital management is concerned with the short-term, operational aspects of managing a company's current assets and liabilities.

Take control of your working capital today

Working capital management isn’t just a financial principle—it’s the backbone of operational efficiency and business growth. For CFOs, VPs of Finance, Controllers, and Treasurers, understanding and implementing these strategies is vital for maintaining liquidity, optimizing cash flow, and securing a competitive edge.

Find gaps in your working capital strategy? Prioritize stronger relationships with suppliers, streamline receivables, and harness the power of automation to elevate your game. A balanced working capital approach today can fuel unprecedented growth tomorrow.

Naomi Goldberg
10
Cash Management
Cash flow management survey 2025: The results are in

To get more insight into the state of AI and automation in cash flow management in 2025, we commissioned a survey of 200 senior finance professionals. Its purpose is to shed light on their current methods, challenges and priorities.

This report was administered online by Global Surveyz Research, an independent global research firm. The survey is based on responses from CFOs, VPs Finance, Directors/Heads of Finance, Controllers, and Treasurers across a mix of industries including tech, E-commerce, real estate, asset- based companies, hospitality, and manufacturing.

Survey participants hailed from companies with an ARR of $50M+ and treasury departments that include 4+ people (25%), 1-3 people (25%), or no treasurers (50%), in the US, UK, DE/FR, and MEA.

What the survey found: Increasing pressure on finance teams to improve efficiency, but continued caution about adopting AI solutions 

The survey revealed that 33% of respondents faced internal operational risks, such as fraud or system breakdowns, over the past year. Additionally, 32% highlighted regulatory constraints, while 27% cited debt obligations with near-term maturities as significant challenges. This convergence of internal and external pressures is compelling organizations to rethink their approach to cash flow management.

To stay resilient, finance teams are focusing on achieving real-time visibility and implementing proactive measures to mitigate risks before they escalate.

According to the survey, areas such as audit and compliance, expense management, transaction categorization, and cash flow forecasting were rated equally as high priorities for AI implementation. These technologies are streamlining traditionally labor-intensive processes, enhancing accuracy, and freeing up valuable resources.

Larger enterprises, in particular, find AI indispensable, as its ability to process vast transaction volumes reduces the burden on finance teams and allows them to focus on strategic decision-making.

The adoption of AI is not without its challenges. Concerns around cost, regulatory compliance, and data reliability remain top of mind for many finance teams. However, the benefits of automation—from error reduction to improved forecasting capabilities—are undeniable. By investing in scalable, AI-driven solutions and prioritizing data quality, companies can future-proof their operations and ensure they are prepared to navigate an increasingly complex financial landscape.

As the 2025 survey highlights, embracing innovation is no longer optional for finance teams. By leveraging AI to overcome liquidity challenges and optimize operations, organizations can transform their cash flow management processes and secure a competitive edge in an era of rapid change. 

Download the full survey report here. 

Naomi Goldberg
5
Cash Management
What controllers need to know about treasury management in pre-treasury teams

At growing companies, or companies with lean finance teams without a dedicated treasury function, controllers often find themselves wearing multiple hats. Without a dedicated treasury team, the responsibility of treasury management often falls on their shoulders. This expanded role requires controllers to not only excel in traditional financial functions but also to master the complexities of managing liquidity, mitigating risks, and ensuring financial stability.

Here’s what controllers in lean pre-treasury teams need to know about taking ownership of treasury management:

Juggling complex treasury operations, with lean resources

Without a dedicated treasury team, controllers must take charge of several critical treasury functions:

  • Cash Management: Ensuring the organization has sufficient liquidity to meet short-term obligations while avoiding excessive idle cash. This involves cash flow forecasting, tracking accounts receivable and payable, and optimizing cash reserves.
  • Risk Management: Identifying and addressing financial risks, including currency fluctuations, interest rate changes, and credit risks. Controllers may need to implement basic hedging strategies and stay vigilant about market trends.
  • Debt Management: Managing loans, credit lines, and other forms of debt effectively, balancing costs and flexibility while ensuring compliance with loan covenants.
  • Investment Management: Making decisions about surplus funds to maximize returns while maintaining liquidity and mitigating risks.

Understanding and taking ownership of these functions empowers controllers to ensure the organization’s financial health in the absence of a treasury team.

Prioritizing cash flow visibility

For controllers handling treasury responsibilities, cash flow visibility is paramount. Accurate, real-time insights into cash positions enable controllers to:

  • Identify and address liquidity gaps.
  • Plan for short-term financing needs.
  • Optimize working capital.

Leveraging tools like cash management systems and enterprise resource planning (ERP) software can provide controllers with a consolidated view of cash across accounts, currencies, and business units. This visibility is crucial for effective decision-making.

Utilizing technology as a resource to work more efficiently

Controllers in lean teams must rely on technology to handle treasury tasks efficiently. Key tools and innovations include:

  • Treasury Management Systems (TMS): Automating processes like cash forecasting, payment approvals, and risk assessments to reduce manual work and enhance accuracy.
  • Robotic Process Automation (RPA): Streamlining repetitive tasks such as bank reconciliations and cash position reporting.
  • Artificial Intelligence (AI) and Machine Learning (ML): Using AI and ML for predictive cash flow analysis, fraud detection, and scenario modeling.

These technologies not only save time but also help controllers manage treasury responsibilities effectively, even in lean setups.

Mitigating financial risks without dedicated resources

Managing risks becomes more challenging without a dedicated team, but controllers can still establish effective practices:

  • Develop straightforward policies for managing foreign exchange and interest rate risks.
  • Stay informed about regulatory requirements to ensure compliance.
  • Utilize basic hedging techniques or financial products to mitigate risks where appropriate.

Controllers should also focus on regular reporting and analysis to monitor risk exposure and adjust strategies as needed.

Collaborating across functions

In lean organizations, collaboration is essential. Controllers must:

  • Work closely with finance and operations teams to gather relevant data.
  • Align treasury responsibilities with broader financial goals.
  • Communicate regularly with executive leadership to ensure transparency and alignment.

Collaboration helps bridge resource gaps and ensures that treasury management is integrated into the overall financial strategy.

Ensuring regulatory compliance and strong governance

Even in lean teams, compliance cannot be overlooked. Controllers must:

  • Stay updated on tax regulations, financial reporting standards, and anti-money laundering (AML) requirements.
  • Implement strong internal controls to prevent fraud and errors.
  • Use technology to streamline compliance tasks and ensure accuracy.

By focusing on governance and compliance, controllers can safeguard the organization’s financial integrity.

Balancing strategic and operational roles

Controllers managing treasury functions must balance day-to-day operations with strategic planning. This includes:

  • Evaluating short-term and long-term financing options.
  • Planning for growth initiatives, such as capital investments or expansions.
  • Assessing the financial implications of key business decisions.

By adopting a strategic mindset, controllers can contribute to the organization’s financial success while managing immediate treasury needs.

Adapting to dynamic financial environments

Economic and market changes can pose significant challenges for treasury management. Controllers in lean teams must:

  • Monitor macroeconomic trends and their potential impacts.
  • Adjust strategies in response to changing interest rates, inflation, or currency fluctuations.
  • Build contingency plans to address unexpected disruptions.

Adaptability and proactive planning are crucial for navigating an ever-changing financial landscape.

Supporting controllers in pre-treasury teams to manage complex treasury operations

Panax is designed for lean teams with complex treasury needs, so it is a perfect tool for controllers who need to manage treasury. Panax utilizes automation and AI to reduce manual work and increase strategic insights, so controllers can have full visibility over all of their cash. Panax makes cash forecasting and budgeting easy, even without a dedicated team. Panax generates reports so that controllers can get a bird’s eye view of their cash situation, but also deep dive into specific entities or currencies, so they can avoid cash risks and optimize liquidity. Get a Panax demo here. 

Naomi Goldberg
10
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