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How to Use Real-Time Financial Data to Improve Your Cash Flow Forecast

Jun 27, 2022

Real-time data is transforming our lives. The days of being caught in a rainstorm without an umbrella or in a bulky sweater on an unseasonably warm day are long gone. Similarly, accounting systems that provide an up-to-the-minute look at a company’s condition mean businesses are better prepared to avert a potential cash flow drought or capitalize on a pending windfall.

Just as we have come to expect specific, actionable, real-time data on the weather — wherever we are — business decision makers and other stakeholders have come to expect accurate, “right now” information regarding the entity’s condition be available at their fingertips.

Areas where real-time financial data can transform a business cash forecasting process include:

  • Capital investments. An accurate cash flow forecast helps business owners make better decisions about when and how much to spend.
  • Leasing versus buying. A better understanding of cash flow can help answer the question of whether purchasing or leasing (which typically incurs smaller monthly payments) is a better option.
  • Sources of financing. Businesses run on the investment and energy of their owners. However, to expand or grow they often rely on other people’s money. Whether those funds come from bank loans, investors, or another source, creditors expect regular, timely updates on the company’s financial position. Creditors were once comfortable with three-month-old financial statements, now an outdated reading of a business’ “temperature” is not good enough.

Today’s Cash Flow Forecast: Sunny With a Chance of “Making it Rain”

Just like weather predictions, cash flow forecasting is as much art as it is science. That said, certain technological advances have improved the accuracy of forecasts and projections in both arenas. Next-generation accounting software uses cutting-edge functionality allowing decision makers to equip their businesses with the best resources to prepare for any circumstance. Those who are evaluating their current accounting software should research the following features of the proposed alternatives:

  • Automated bank and credit card feeds. Accounting software that integrates with financial institutions’ daily feeds lets the users view their account balances and transactions in the accounting application rather than toggling between multiple websites. When this information flows automatically into the business’ books, the company benefits from more timely and accurate numbers and efficient processes.
  • Availability from any location and to multiple users at the same time. The Internet has revolutionized our lives, and the growing adoption of cloud-based applications allows us to collaborate in new and exciting ways. With on-premise accounting software, the need to send files back and forth to accountants made financial reporting a clunky, start-and-stop process. With today’s cloud-based solutions, business owners can invite accountants and other company advisors to log in and view the same data at the same time. In turn, they can work together and make strategic business decisions based on accurate numbers.
  • Business analytics. Yesterday’s accounting software was focused on the past. Users could generate profit and loss statements, balance sheets, and other historical reporting. With some programs, users created an annual budget and monthly budget-to-actual reports. But what about the future? The accounting platforms of today and tomorrow provide insights and analysis that helps decision-makers gauge where their business is headed — not just where it has been.

Let CRI Help Bring a Sunny Outlook to Your Business’ Cash Flow Forecast

Remember: Information is only as useful as its interpretation. Business owners and decision makers should exercise sound judgment — and lean on experienced business advisors — to translate financial data into useful insights. If you are ready to use real-time data to forecast the patterns of your business, then CRI’s client accounting services team can help.

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