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Benefits of Strategic Cash Reconciliation and Cash Forecasting

cash reconciliation

Cash forecasting and reconciliation are integral parts of business and cash flow planning. Without accurate forecasts, it's difficult for businesses to plan their cash flow needs. And daily cash reconciliation is critical to ensuring that enough liquid cash is available in operating accounts to cover working capital needs.

"Given their importance, companies need to view cash forecasting and reconciliation from a strategic perspective," says Katrina King, Executive Vice President and Treasury Management National Sales Manager for Cadence Bank. "Doing so will enable treasurers and CFOs to improve cash flow management and increase their return on excess liquidity."

How Treasury Management Tools Can Help

A good first step is to talk to your bank about the different treasury management tools that can help you improve your cash forecasting and cash reconciliation. According to King, companies need to be able to access account and transaction information in a timely manner in order to reconcile their cash and cash needs on a daily basis.

"Bank treasury management tools are designed to provide treasurers with current and previous day data for this purpose. Treasurers can bring this data into their module to reconcile their cash position, anticipate cash outflows and make sure they have enough funds to cover them."

The most helpful treasury management tools for improving cash forecasting and reconciliation include the following:

BAI Reporting/Direct Access — The bank provides prior-day deposit, account balance and transaction information electronically in a standard BAI (Bank American Institute) or BAI2 format. BAI codes enable you to update your accounting systems automatically with data from multiple banks, making the process fast and easy.

"With all of your data in a BAI file, you can perform automated, consolidated account reconciliation," King explains. "This helps automate your cash forecasting by pulling all your data together in one place."

Information Reporting — You will receive secure access to review all of your account information online. This provides you with the up-to-the minute information you need to manage your daily cash position and liquidity needs. Standard and custom reports allow you to see the information you want in the format that works best for you.

You can also initiate electronic transactions using Information Reporting, including wire transfers, one-time or repeating ACH payments, payroll, and federal and state tax payments. State-of-the-art security and encryption technologies protect your financial data and enhanced administration provides the internal controls that help minimize fraud risks.

Multibank Balance Reporting — This service pulls BAI files with transaction and balance detail from other banks into a single application at one bank. As a result, you get an immediate snapshot of your entire cash position across all the different banks you work with in one consolidated application for both domestic and international accounts in multiple currencies.

"One of the biggest pain points for companies with multiple bank relationships is having to sign into all of the different banks' information reporting systems to access the data they need," says King. "Multibank Balance Reporting makes this process simple and easy. Outside of cash forecasting, all of your data now is in one place, making daily reconciliations a breeze."

Your Strategic Treasury Management Advisor

Offering treasury management tools like these is just the beginning. What companies really need is a bank that will take the time to understand their needs and make strategic recommendations based on them.

King notes: "Which tools are going to help you improve your daily cash management process and make it more efficient? Of course, there's a cost to these services, so your bank should help you weigh the cost against the potential cash forecasting and reconciliation benefits they will offer. The benefits of working with a bank treasury management team that serves as your strategic advisor become readily apparent here."


If you have more questions about how these and other treasury management tools can help improve your cash forecasting and reconciliation, please contact your Cadence Bank Treasury Management representative.