Risk Of Poor Cash Positioning And Forecasting In The Absence Of Order To Cash Software
CASH POSITIONING AND FORECASTING
For many companies, cash flow is the lifeblood of operations and remains one of the vital metrics that macro-level financial executives must keep track of. Short-term visibility into cash position and accurate cash forecasting are therefore of paramount importance, and the development and optimization of order to cash software is often vital for unlocking insights into the future of companies financial stewardship. In its absence, CFOs, COOs, and other finance executives may encounter grave risks.
Without access to analytics derived from order to cash technology, finance chiefs may find it difficult to allocate capital strategically, or establish fees, payment terms, and covenants that could otherwise drive greater profits. They may also lack the necessary insights to benchmark operations and production against peers or to find and correct inefficiencies or costly processes. This lack of data-driven insights can additionally lead to extended payment cycles from clients or exposure to account duplications, as well as punishing penalties that come with failed audits.
An inability to project cash flow accurately may also result in mismanaging credit exposure or overpromising payment terms that the company could not reasonably afford. This could put the organization in default of existing debt covenants and lead to negotiation failures with lenders or even bankruptcy. Without sophisticated system of predictability, finance teams may struggle to secure access to capital and portfolio investments, or be at risk of investing beyond their means and running out of operating capital.
The risks of not having the insights provided by order to cash software are numerous, and could leave the CFO or COO in the dark concerning the path of cash position and forecasting. While some technology costs may seem daunting upfront, the benefits of improved data-driven visibility or predictive modeling can be worth the investment, as well as enhance key decision making and drive better business results.
