How to build a scalable cash tech stack?
a blog series dedicated to cash people
The faster your business decides to grow, the harder the cash predictions become. Cash prediction can have a significant effect on your runway. Cash flow starts with invoicing and ends with a cash forecast. Modern cash forecasting tools extract data from your ERP, banking, and CRM software and use machine learning to predict your daily cash. The modern cash tech stack is scalable, saves time, and improves your cash position when your business scales up.
Choose an ERP that has open APIs
An enterprise resource planning (ERP) system, the central repository for financial data, is designed for accounting and it only gives a backwards-facing view. With that lag, you have difficulty assessing cash burn or runway in real-time.
If you are scaling, your focus is on sales and your team can’t spend hours to figure out when you are going to run out of cash. Rule number one is to make sure, that your ERP has open APIs. As your business grows and becomes global, you need the financial data to predict cash position or integrate with the other modern data layers.
Check that your banks are PSD2 compliant
The same goes for your banking. If you operate in Europe, make sure that your bank is PSD2 compliant, which enables you to adapt new technologies to better manage your banking operations. With software that connects to your bank accounts, you can predict the cash position, FX risk, debt, and money movements in real-time.
The high burn rate needs data fusion
Burn rate is the euro’s spent per month. A high burn rate is usual for strong growth. Surprises come when you least expect them, so with a high burn rate, it’s important that nothing falls through the cracks on your cash forecast. Connect all your cash impacting data to your cash forecast.
Why is cash forecasting painstaking in spreadsheets?
Outgoing cash, like salaries, taxes, AWS monthly billing or Hubspot fees can be done on spreadsheets but it’s slow and sensitive for human errors. Invoices fall through the cracks.
Incoming cash, like Customer purchase and payment behaviour, can’t be done on a spreadsheet because Customer purchase and payment behaviour are sporadic.
Cash forecasting can be a painful process, if we do invoice and payments using different software, like Stripe for customer payments, accounting software for salaries and taxes, credit cards for AWS, Hubspot, Slack, Google and so on. Or we use local ERP in the home country, but Netsuite or Xero in subsidiaries. Having several bank accounts increases the difficulty level. This is where data and machine learning can help you.
Let machine learning to do the hard work for you
Cash forecasting is predicting cash transactions. Using open APIs you can automatically connect all the cash impacting data to your cash forecast. Data fusion from your ERP, CRM and banking software combined with machine learning works as a weather forecast. It can predict your customer purchase and payment behaviour and even invoices that have not been sent, more than 30 days earlier. Effortless, yet with super accuracy.
riskrate is a superior 30–90 days cash forecast for Cash people using data fusion and machine learning.
