The basis for any cash flow insight is understanding what drives cash inflows and outflows. Finance and treasury teams are used to downloading bank statements and manually categorizing each transaction to create the cash database that can then be used for various analyses. Rule-based categorization saves significant time and reduces some of the manual effort. But it still requires initial, time-consuming setup and ongoing maintenance.

AI-based models are changing the game for transaction categorization. From automatically identifying certain types of transactions (e.g. intercompany transactions) to enhancing categorization by identifying similarities between uncategorized and previously-categorized transactions, AI makes the job faster, easier and more efficient. 

Additionally, AI enables companies to leverage a broader knowledge base (such as how bank fees are charged by different banks). Bottom line - AI is reducing the time needed to categorize transactions by >90%, without compromising on (and even improving!) categorization accuracy. 

Trends, Anomalies, and Insights

AI is transforming treasury operations by automating routine tasks and providing predictive insights that empower teams to make smarter, more strategic decisions.

Once the team has a robust database of categorized transactions, it’s time to analyze and make decisions. All the data is there, you just need to find the interesting insights. Sounds easy right? In fact, every finance or treasury analyst knows that's actually the toughest, most time-consuming part.

Thinking of which queries to run, technically building the reports, and identifying the trends and anomalies that are insightful, are all tedious tasks that require a lot of trial and error and repeated number crunching.

AI is revolutionizing cash flow analytics. New generative models are able to identify trends in a contextual manner, and surface only those insights that can potentially have an impact on the business. Anomaly detection can be easily calibrated to surface suspicious transactions and high-impact inflows and outflows that require the team’s attention.

Finance and treasury professionals’ shortage is a huge problem that’s only going to become worse. The ability to leverage AI empowers lean teams to focus on the insights and on devising effective action plans, rather than on manual, less value-add number crunching. We have entered a new reality, one that makes finance and treasury teams much more strategic. 

AI revolutionizes cash flow analytics by identifying contextual trends and anomalies, enabling treasury teams to focus on strategic decision-making rather than manual data analysis

Cash Flow Forecasting

This is one of the most sought after AI features when it comes to cash flow management. It is also one of the most over-hyped. Yes, it would be amazing if a magical AI could tell the future of cash flow and accurately predict where a company’s cash balance is headed. But, this is unfortunately not a realistic expectation (at least not until AGI takes over all of our lives and makes all decisions).

Even the most advanced AI-based models use historical data to forecast the future, and the reality is that for complex companies, the future never behaves exactly like the past. There are always changes that need to be factored in and taken into account when trying to build and roll an accurate cash flow forecast.

Moreover, the goal of a cash flow forecast isn’t just to get to the bottom line of ending cash balance, it’s also to understand causes and effects and respond to cash changes effectively so as to prevent problems. If someone offers you a click-of-a-button automated AI cash forecast, run as fast as you can! 

Nevertheless, when used correctly, AI can have tremendous value for accurate cash flow forecasting. While it’s not a fortune teller, it can effectively identify trends and suggest optimal formulas to use, provide basic root-cause analyses, and suggest actions and mitigations that can dramatically improve both the forecast building process and the decision making process that follows. 

Dynamic, Natural Language-generated Reporting 

Building reports is hard. Whether it’s in Excel, a BI tool, or a dedicated treasury platform, inputting the relevant syntax that will spit out the analysis you’re trying to perform requires some technical skills and tedious trial and error until you get it right. For example, SQL queries such as w​​indowing, aggregation, and grouping don’t come naturally to most treasury analysts. 

This is one area in which generative AI is creating a completely new reality. LLMs (large language models) that tap into companies’ cash data can automatically generate any report that crosses an analyst’s mind, based on natural language input. Want to know what were the three biggest expenses last week? Just ask. Want to understand how fast collection is growing in a specific geography?

No problem. The two caveats here are (1) the data needs to be properly categorized, otherwise it’s a classic garbage-in-garbage-out situation (AI can help with that too – see #1), and (2) that you need to know what’s interesting to explore (see #2).

AI is Changing the World

AI really is changing the world, and finance and treasury operations are no exception. It can leapfrog a few of your team’s abilities, including some important ones:

• Quickly and accurately categorize transaction
• Surface important and insightful trends and anomalies
• Build accurate and explainable cash flow forecasts
• Empower you to easily answer questions regarding your company’s liquidity. 

However, it’s important to remember that it’s not like a magic device that transports you instantly from one place to another. A more fitting analogy is that it’s like a bike you can ride to get from point A to point B – you still have to pedal, but you will get where you're going faster and less sweaty.  

 Are you interested in learning how your company can benefit from AI powered cash flow management? Let's talk.

‍AI is a term that’s been thrown around a lot recently – AI forecasting, AI automation, AI finance operations, AI reconciliation, AI EVERYTHING. While the progress that’s been made in the field is undoubtedly a game changer for treasury teams, there’s also a lot of buzz and hype that’s not always backed by actual value.

‍The goal of this post is to demystify AI and shed light on some areas where it can truly give finance and treasury teams superpowers. Let’s get to it.

In a recent conversation between Adi Barak, VP of Product at Panax, and Joel Jeselsohn, VP of Finance at Tangoe, the two finance experts dove deep into the challenges and opportunities facing finance teams around cash forecasting, especially for mid-sized global companies. They touched on topics such as the impact of inflation, the importance of cash forecasting, and the role of automation and AI in financial processes. Here are the main takeaways from their discussion.

The Case for Automation in Cash Forecasting

Both Joel and Adi stressed the advantages of automation in cash forecasting, pointing out that it minimizes errors, boosts efficiency, and allows teams to focus on higher-value tasks. Manual processes, such as data collection and tagging transactions, are time-consuming and prone to error. By automating these processes, finance teams can free up time for data analysis and decision-making, ultimately creating more value for their organizations.

Joel shared his own experience with automating Tangoe’s forecast, revealing that while their manual processes were “good enough,” automation took their forecasting to the next level. The shift allowed Tangoe to scale its operations without increasing headcount, improved team morale, and enabled the company to extend its forecast horizon from 13 weeks to as far as 12 months.

By automating cash forecasting processes, finance teams can free up time for data analysis and decision-making, ultimately creating more value for their organizations

Managing the Risks of Automation

Despite the clear benefits, Joel and Adi acknowledged that automation comes with risks, such as the potential for low adoption and integration issues with existing systems. They recommended ensuring that finance teams remain hands-on, focusing on analyzing data rather than becoming too reliant on automation tools.

Another challenge is that forecasts are only as good as the data that goes into them. Automation tools should be carefully monitored to ensure that they accurately reflect the financial health of the organization, and finance teams must remain vigilant in identifying any potential errors or discrepancies.

AI’s Role in Financial Forecasting: Hype or Reality?

Joel and Adi both agreed that AI is not just hype; it holds real promise for improving financial processes, especially in forecasting. AI excels at analyzing historical data and generating projections much faster than human analysts. However, they pointed out that AI is not a replacement for human oversight, particularly when it comes to decision-making in unique or unpredictable situations.

For instance, AI might not be able to account for significant events like acquisitions unless explicitly programmed to do so. Where AI can add value is in running multiple scenarios simultaneously or predicting customer payment behavior based on past trends, providing finance teams with more accurate forecasts.

Measuring Forecast Accuracy and Reporting

When it comes to measuring the accuracy of forecasts, Joel stressed the importance of comparing actual results to the forecasts made weeks or months earlier. This approach allows teams to fine-tune their models, identify trends, and adjust forecasts as business conditions evolve. Accurate forecasting depends on regular evaluations and the ability to quickly pivot when unforeseen circumstances arise.

AI and Automation are the future of finance, but only when managed by the finance team, and not replacing the finance team.

As automation and AI become more integrated into financial processes, the role of finance teams is evolving. Rather than focusing on manual data entry and basic tasks, finance professionals are now empowered to focus on strategic analysis and decision-making. Both Adi and Joel made it clear that embracing these technologies is no longer optional—it’s essential for staying competitive in today’s fast-paced business environment.

Automation and AI offer finance teams the tools they need to navigate an increasingly complex financial landscape, but human oversight and expertise remain critical. As companies continue to adapt to this new reality, those that successfully integrate these technologies into their operations will be better positioned to thrive in a post-pandemic world.

Watch the full recording of the webinar here, or click here to download our e-book, for a deep dive into AI and Automation in Cash Forecasting. 

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As companies grow, so do their cash management requirements. This leaves CFOs and treasury teams with new challenges to deal with. They need to manage multiple accounts across multiple currencies and geographies, ensure optimized use of financial instruments like credit lines and investments, gain control of their liquidity status, forecast cash flows, and more. The cost of an error is high, which is why many teams turn to cash management solutions at this stage.

Modern cash flow management solutions are automated platforms for optimizing cash flow. Some of them are also AI-driven. Instead of dealing with bulky, complex spreadsheets, they collect all your cash flow data into the platform. and present it with an additional layer of analysis. This streamlines the cash management and forecasting processes, ensures up-to-date visibility, and helps lean finance teams to manage cash risks,optimize liquidity and increase ROI on excess cash or debt.

While the benefits of adopting a cash flow management solution are obvious, choosing the right solution can be challenging. The following items should not be missed when evaluating your solution. Following this list ensures you are able to maximize your efforts and free yourself up for other responsibilities. 
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A robust cash flow management solution is essential for real-time financial tracking, ensuring that your business stays on top of its financial health with accurate and integrated data
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1. Complete cash visibility

Obtain a comprehensive and complete daily view of your cash positioning, including all bank and payment accounts. Make accurate and relevant short-term and long-term decisions with confidence without errors and data integrity risks. Look for:

• A single and centralized dashboard

• Up-to-date liquidity snapshot of cash, investments, and restricted cash

• Ability to filter across accounts, institutions, currencies, and more

• Daily/monthly cash reports

• Trends analysis

• Customizable reports

2. Reliable and comprehensive data connectivity

Probably the most important item on the list - Ensure your cash management solution brings in all the data you need to manage your cash flow. This will ensure your data is reliable, regularly updated, comprehensive, and enables you to make decisions that support your financial needs. Look for:

• Data connectivity via APIs to all global financial institutions, including banks, ERPs, and cash platforms, and any other financial systems that you use so that your data is regularly updated.

• Reliable data connectivity when APIs are not available, or not supported. Make sure there are alternative methods of gathering data from all financial institutions, even those that don’t support API connection, so you can get full cash flow visibility across all your accounts.  

• An overview and deep-dive of your cash flow and all activities including:
  - Reconciliation of transactions
  - Inflows and outflows
  - Trends
  - Historical balances

3. Reports and insights

Identify and prevent cash-related risks and identify and seize cash-related opportunities to optimize cash management and ensure errors are prevented. Look for:

• Actionable insights for effective cash management

• Alerts that allow immediate response

• Ability to set up account automatic buffers to improve capital efficiency and transfers

• FX hedging support

4. Resource efficiency

Make sure using your cash management solution is easy and intuitive to use. This will be one of its main advantages over using Excel: replacing manual work, accessible from anywhere, and freeing up you and your team for other prioritized needs. Look for:

• Self-serve: No IT required

• Tagging capabilities

• Easy setup

• SaaS solution

• Collaboration capabilities

5. Smart categorization abilities

Manage your accounts, transactions, and cash positioning to accurately analyze your current and future cash flow. Look for:

• Ability to create customized categories and sub-categories

• AI-based categorization process to replace your manual labor

• Automated ERP matching

6. Forecasting abilities

The adoption of a new cash management solution is a great opportunity to automate your cash forecasting, increase its effectiveness, and improve forecast quality by reducing human errors.. Look for:

• Easy comparison of forecasts against actuals

• Easy data collection and categorization, including ERP data

• Customizable forecasting methods for your business

• AI-based forecasting for tailored insights

7. Security

Safeguard your organizational data to ensure your cash flow data is secure, comprehensive, reliable, and available for you to use. For data security look for:

• Compliance with leading regulations like SOC 2

• Application security through practices like third-party penetration testing and vulnerability scanning

• Data encryption in transmission and at rest

• Real-time monitoring of risks and policy compliance

• Access management- RBAC, least privilege, etc.

• Secure development practices

What’s Next?

Choosing the right cash management solution is a strategic choice, since it will directly impact your ability to streamline financial operations, manage liquidity, and optimize cash flow. Therefore, this decision should not be taken lightly. Use this checklist to evaluate and compare different solutions. Don’t be afraid to ask vendors the difficult questions it raises, from which data they connect to to how they support forecasting, and more. By comprehensively comparing solutions, you can ensure your treasury operations will be more robust and accurate than ever. 

Learn more about Panax’s cash flow management solution that supports lean finance teams with complex treasury management needs.

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