Fluidly combines artificial intelligence with financial modelling to produce a reliable forecast that’s always up to date.
RG’s Outsourced|FD service has partnered with Fluidly to provide its clients with accurate, real-time and meaningful cash flow data, allowing them to plan for future scenarios based on predicted cash requirements.
Cash flow forecasting
Cash flow forecasting is more essential than ever but achieving accurate real-time forecasting can be difficult. Producing a reliable short-term picture of the future cash position of a business is often complex, particularly if the available data is not sufficiently accurate and the forecasting software is not user friendly.
A significant percentage of business failure is due to poor cashflow management,. For the health and wellbeing of both businesses and those who run them, accurate short-term forecasts are vital.
We believe that producing a good, clear, and accurate short-term forecast comes down to two key factors:
- When is money is really going to come in (cash in); and
- being able to reliably predict the timing of a business’s outgoings (cash out).
When is money is really going to come in?
The majority of (short-term) forecasting tools use the date that invoices are due (the agreed terms), to forecast when cash will come in. This assumes (often wrongly) that all outstanding invoices will be paid exactly to those agreed terms. If we can predict the real payment behaviour, a business will be able to forecast much more accurately, and with a more realistic outcome. Ignoring and not considering the payment patterns of your customers can cause unnecessary cash flow difficulties.
By using Fluidly, we have been able to overcome many of the problems regularly experienced when using other cash flow forecasting software.
Fluidly allows us to gain an understanding of the actual historic behaviour of each customer, which in turn improves the overall accuracy of our data.
As an example, Fluidly’s machine learning algorithms focus on the actual invoice payment activity. This means that the customer who always pays 10 days late, or the one that doesn’t pay until chased are correctly accounted for within the forecast. This avoids producing a misleading forecast that shows cash coming into the bank, when in reality, it is not going to.
What if your business does not issue invoices – can you still predict?
If your business operates without sales invoices, it can be extremely difficult to predict regular and common cash movements. A perfect example of this are businesses that collect payments via cash, direct debit and credit cards, like restaurants, bars and shops.
To build accurate and reliable financial forecasts in this situation, we need to consider what’s happened previously – this then allows us to build a picture of what might happen in the future. This is where machine learning is invaluable. Using Fluidly’s machine learning capability allows clients to identify historical actual cash collection patterns and build that into a reliable forecast.
Having the ability to predict the timing of a business’s outgoings.
Many forecasting tools make their predictions based on the supplier invoices received. But a significant proportion of a business’s outgoings are not invoiced, for example rent, loan repayments, salaries, dividends and non-invoice direct debit payments. Incomplete data puts the business into dangerous waters.
Fluidly’s ability to look at the actual pattern of payments in and out is invaluable.
If you would like to discuss your cash flow forecasting requirements further, please contact:
Dan Cooper, Director & Head of Outsourced|FD.