Survey says: 98% of sponsors have told their portfolio company CFOs to prioritize the use of AI in the finance function. But the pace of adoption has been far slower than sponsors want. The problem? AI feels like a massive undertaking, and CFOs don’t know where to start or who to turn to for help.
But there’s a shortcut: AI-enabled cash flow forecasting. The key to meeting sponsor AI demands right now is using what you (should) already have: a basic budget/forecast, AR/AP tracking, a functioning ERP system—and bolting on a tool that turns your existing data into AI-powered insights with minimal prep work.
In other words, AI-enabled cash flow forecasts are low effort, high ROI. Let’s break it down:
Why bother with a cash flow forecast?
13-week cash flow forecasts used to be thought of as a distressed company tool. Not anymore. Smart CFOs know they’re essential for ongoing cash management. Specifically, a cash flow forecast supports:
- Liquidity and working capital management: Proactively managing daily cash balances ensures sufficient liquidity for disbursements and growth initiatives, while highlighting opportunities to improve working capital efficiency.
- Good corporate hygiene: A 13-week cash flow forecast uncovers issues that accrual accounting may mask and aligns forecasts with actual and planned cash activity.
- Risk readiness and scenario planning: Clear visibility into your future cash position equips CFOs to handle unplanned expenses, mitigate underperformance risk, and plan for growth—thus building confidence across stakeholder groups.
AI vs. Excel: Is the AI juice really worth the squeeze?
A traditional 13-week CF is done in Excel, pulling data from various sources to create a model fueled by manual mapping tables. The model is reliant on significant human involvement. That said, for some organizations (like those with less complex business models and tech infrastructure), Excel may be sufficient.
So, the question begs: Is the investment in AI really worth it? In a word: yes. The squeeze doesn’t take all that much effort (especially with the right partner), and AI-enabled forecasts have hard-to-ignore advantages. They:
- Deliver quick-hitting value: Bolt-on AI-enabled cash flow forecasts are quick to implement—and therefore quick to deliver increased visibility into your cash flow situation.
- Save people-hours: An Excel-based cash flow forecast requires extensive manual effort—an AI-enabled one doesn’t. Let automation carry the brunt of the forecasting while your team focuses their time on high-value work.
- Are built to scale: AI-enabled cash flow forecasts are flexible based on business needs and can connect to multiple different systems—which means they’re able to grow and change along with your organization. This is especially important in private equity, where acquisitions are integral to sponsors’ growth strategies.
- Are intuitive: There’s no big building or training process for an AI-enabled cash flow forecast. The no-code approach does not even require Excel proficiency, which takes pressure off bandwidth-constrained Finance departments.
- Ensures audit confidence and security: AI-enabled cash flow tools typically include change logs and detailed security access that enable full transparency into who accessed/modified forecast inputs—increasing governance and controls that pave the way for a more formal and accurate audit process.
- Improve forecast accuracy: AI-enabled, automated cash flow forecasts improve accuracy through deeper intelligence, frequency, detail, visibility and more actionable insights. In this uncertain economy they can also improve working capital and even (potentially) EBITDA performance.
Is AI-enabled cash flow forecasting right for you?
Short answer: probably. AI-enabled cash flow forecasting delivers the biggest ROI to mid-market companies dealing with forecasting complexity (and really…what company isn’t dealing with complexity now). Consider AI-enabled cash flow forecasting if:
- Your finance team is small and/or has little bandwidth: Free teams up to focus on meaningful analysis instead of manual data aggregation.
- Your company has multi-location or multi-subsidiary organizations: Get cash visibility on a by-region or by-BU basis, in addition to the consolidated view.
- You have long-standing customer and vendor relationships: Those with a robust history of invoices and payments can leverage AI/ML to improve forecasting accuracy, spot trends, and identify changes/opportunities across your cash flow position.
- You generate $100M-$10B in revenue: If you have enough complexity to justify automation with structured (enough) data systems that make integration feasible, you’re in an ideal position to implement AI-enabled cash flow forecasting.
So… how does Accordion help?
We work side-by-side with your team from strategy to execution, ensuring that you’re executing using the right AI cash flow forecasting platform for your business needs. We’re with you through:
- Model and process design: We’ve built 100+ cash flow forecasts for PE-backed companies, which means we know how to tailor both the model and the process to meet your forecasting and reporting needs. Our extensive requirements gathering process ensures that we’re selecting the best forecasting approach (by line-item, customer, vendor, etc.) and translating your business needs to forecasting logic. What’s more, we’ll stress test and validate model inputs to answer the “what ifs” that prepare you for whatever comes your way.
- Forecasting optimization: We work with you to understand and derive value from common cash flow forecast reporting—including variance and accuracy analysis—and translate reporting into actionable forecast improvements.
- Seamless knowledge transfer: We ensure your team is equipped to maintain and evolve the model over time, so they can confidently update, analyze, refine, and expand as the organization grows.
- Establish risk management and contingency planning: Not even AI forecasts are risk-free. We can assist with setting up and running key scenarios to help your team respond quickly and effectively when conditions change.
Sponsors expect their CFOs to adopt AI. Don’t let it intimidate you. Start with the simple: you have all the tools you need to generate accurate, automated, and value-driving cash flow forecasts with AI.
Accordion is here to help. We’ll partner with you from strategy to execution to build an AI-enabled cash flow forecast that works for your business, your team, and your Value Creation Plan.