In cash flow analysis: how can bi technology help


Imagine that in today’s era, some people still actually post letters because they think e-mail is difficult and expensive. Every time they have to take their letters to the post office, the postman collects them and delivers them later. Then, delivery takes at least a few days, and e-mail can be exchanged immediately. Inefficient and time-consuming, isn’t it? This is surprising, but this is what some companies do when they ignore the software’s cash flow analysis and choose to continue with Excel based manual data processing.

Bi consulting practitioners have broken the stereotype that only large companies need technology-based cash flow analysis and forecasting. In fact, medium-sized enterprises also need them to track their cash and do it effectively. Long ago, companies had no choice but to try to use several Excel files and manually match and filter them to get a comprehensive picture. This technology is affordable and convenient now.

In cash flow analysis: how can bi technology help

What can be analyzed?

Cash flow analysis answers a series of questions. For example, if there is enough cash flow for the manufacturer to invest in a new real estate, check whether there is enough cash flow for the manufacturer to cover the real estate.

These are just practical. The main question is whether cash flow is sustainable.

In order to achieve comprehensive cash flow analysis and forecasting, the company can aggregate data from multiple sources:

  • Cash flow history
  • Planned and actual operating expenses and capital expenditure
  • Accounts receivable / balance payable
  • General ledger data

In addition, all data can be obtained directly from ERP modules (finance, accounting, sales, human resources, etc.). This means that all values are kept up-to-date and can be automatically converted from predicted to actual values once confirmed.

Challenges solved by technology

Cash flow planning and forecasting

The cash flow analysis software will provide managers with timely, accurate and easy-to-use reports and charts, providing an overview by geography, branches, bank accounts, etc. Cash forecasts can be generated automatically on demand (daily, weekly, quarterly or monthly) and on demand. With such forecasts, financial managers will be warned of cash shortages or surpluses in advance and have time to take some action (for example, if there is free cash, invest in the growth of the company).

Project level view

Large projects, whether internal or customer projects outside the organization, can have a significant impact on cash flow. Financial managers can’t treat big projects as black boxes. They need to look inside. For any project, it is necessary to know its duration, cost of each phase, payment terms (advance payment or payment blocking; one-time or installment payment). Data analysis helps to develop accurate cash plans and successful project implementation.

risk management

Through cash flow analysis software, the company has reliable risk management tools. For example, a manufacturing company operates for profit (as P & G says) and wants to increase its production. However, the company’s cash flow forecast shows that there is not enough cash. In addition, the software will quickly predict the increase of production costs, which indicates that the company will only consider losses from a long-term perspective. Rapid liquidity analysis helps to make the right decisions.

Point of truth from different angles – moment

Another advantage of technology-based cash flow analysis is that data from different sources is aggregated at the data warehouse level. For end users, this means quick response and quick browsing from different angles, because the system already has an answer to any question, just waiting for query. For example, the financial manager can switch from cash flow from operation to investment to cash flow from financing with a few clicks.

To sum up

Cash flow management is very important to ensure the health of enterprises. A company with uncontrolled cash flow is at risk of bankruptcy and reputation damage. From the point of view of business planning and service, click to analyze the risks brought by a large number of projects and services, so as to help the company solve the challenges of cash flow from the perspective of business planning and intelligent management.