Machine learning (ML) and artificial intelligence (AI) have attracted enormous attention in recent years. Over longer time frames, cash flow forecasting is notoriously difficult and certain cash flow items are also inherently unpredictable. Nevertheless, AI/ML can still add predictive forecasting value, where cash flows display patterns of varying degrees of intensity and persistence. Furthermore, the benefits AI/ML can bring to cash forecasting vary widely depending on business type. For instance, companies with strong consistent seasonality in their cash flows may find AI/ML already offers a significant forecasting edge.
AI and ML are still evolving exceptionally quickly and seems likely that their applicability and value to cash forecasting will continue increasing, for both data processing automation and actual predictions. Therefore, as new advances in AI/ ML emerge that have the potential to improve forecasting performance, the cash forecasting solution needs to be sufficiently flexible to incorporate them quickly.
Risks, costs and urgency
As mentioned at the outset, COVID-19 has exacerbated the liquidity management challenge for finance organisations and, given the revenue impact on many businesses, increased the urgency of deploying efficient cash forecasting. Now, more than ever, companies need to have the clearest possible vision of their potential cash needs across multiple horizons.
In this situation, speed of implementation is obviously an imperative, which means that a forecasting solution already embedded within a global electronic banking system has a major advantage. Unlike an external solution, there is effectively no technology implementation per se, simply the enablement of a functionality already present. While an external solution might (eventually) be able to deliver similar functionality, it comes with the appreciable additional costs, delays and risks of an implementation project.
A cash forecasting solution that is already integrated within an electronic banking environment has additional benefits when it comes to user training. Much of the interface will already be familiar to existing online banking users, making remote training and support via secure session both more productive and immediately accessible.1
The need for better cash forecasting is longstanding, but the current environment has made this need more pressing - for some organisations perhaps even an existential concern. Under those circumstances, a fully-integrated forecasting solution that can be made immediately available without additional implementation overhead is extremely valuable. If it also has a flexible and extensible architecture that enables multilevel deployment, while simultaneously facilitating the addition of new functionality, then it presents the opportunity of robust, future-proofed, cash forecasting. This will add considerable value - both in the current highly challenging conditions, as well as more generally - by supporting more effective risk management and facilitating growth.
For more information on how HSBC can help meet your needs please contact your local HSBC representative or visit gbm.hsbc.com
1No need for physical presence of trainer