Cash flow forecasting is crucial for the success of any business. There are many cash flow software solutions and financial experts that can help you get cash flow forecasts right.
In this article, we’ll compare the benefits of using cash flow software and hiring an expert and discuss how combining both can lead to optimal results.
Why Are Cash Flow Projections Critical for Business Success?
Cash flow forecasting helps businesses gain a deeper understanding of their financial position. By predicting cash inflows and outflows over periods of weeks, months or years, businesses can plan their business operations and budget and gauge their room for growth.
Cash flow projections can also help businesses understand who their most reliable customers are and where their biggest expenses come from, making it easier to focus on areas that contribute to healthy cash flow.
Another reason for cash flow forecasting’s importance is that businesses can create realistic short-term goals and long-term strategic objectives. Cash flow projections also show a company’s financial health, which is crucial for attracting investors.
What Software Solutions Offer?
Software like Cash Flow Frog provides businesses with quick, accurate cash flow projections. Collecting and organizing data across departments is a challenge of cash flow forecasting, but cash flow software easily imports historical data from existing spreadsheets from all departments into one convenient place.
Cash flow software can also analyze vast datasets to create detailed cash flow forecasts. Manual calculations consume huge time and resources, whereas cash flow software can perform calculations in seconds.
The software also provides detailed customer insights, for example, identifying customers who pay on time and those who miss payments. Cash flow software comes with extra features, such as cash flow scenario analysis and planned versus actual cash flow comparisons.
Software like Cash Flow Frog integrates with other programs like QuickBooks and Excel for a seamless connection with a company’s existing accounting systems.
When to Rely Solely on Software?
Cash flow software solutions are great for small to medium-sized businesses because they typically have small quantities of data to analyze and simple business models.
Many small to medium-sized businesses also lack employees who can perform detailed cash flow projections, and outsourcing is expensive. Therefore, cash flow software is an affordable way to organize data and create simple, reliable cash flow projections.
What Experts Bring to the Table?
Cash flow software is an excellent tool, but like all technology, sometimes a human element is needed to interpret the data and help businesses make good decisions.
When to Hire a Financial Expert?
While cash will software offers a variety of features to help with all areas of cash flow projection, a financial expert ensures that cash flow projections are accurate. Cash flow experts are also knowledgeable on issues such as taxes, expense reporting and sales forecasting.
Financial experts have experience working with a variety of businesses and industries and can give you advice tailored to your specific financial position, industry and external factors.
Input data is crucial, so if you’re not sure which data to use, a cash flow expert can help identify the most relevant and accurate data to use for cash flow forecasting.
Combining Software and Expertise for Optimal Results
Both cash flow software and human expertise provide unique benefits that others cannot, so it’s best to combine the two for optimal results.
Cash flow software can analyze large datasets. Financial experts can then interpret the data using their expertise and previous experience with cash flow analysis.
Financial experts can also use their expertise to conduct scenario analysis, testing different cash flow projections to give a more realistic picture of potential cash flows. They can also use cash flow software to streamline scenario analysis.
Cash flow experts can check that cash flow software projections take into account taxes and often-overlooked expenses, such as maintenance costs.
Cash flow analysts can look at the projections, interpret their meaning and give advice on what actions the business should take. A financial analyst can also help a business create long-term objectives based on the cash flow analysis.
In conclusion
Once a business understands cash flow forecasting’s importance, the next step is to choose a method to perform cash flow projections. Cash flow software is great for importing data into one place and performing cash flow projections. Software like Cash Flow Frog also provides extra features like customer insights.
Hiring a cash flow expert adds a human element to cash flow projection that cash flow software lacks. A cash flow expert can check that the data you’re using is correct, analyze different scenarios and use their experience in the field to help you make wise business decisions.
