Cash Flow Control: DIY or Delegate?

When considering the option between in-house cash forecasting and outsourcing, it's essential to weigh several critical factors to make an informed decision that aligns with your organization's goals and needs.

In-House Cash Forecasting

Managing cash forecasting internally provides direct control over processes, yet it may lack visibility and robustness, particularly when integrating with vendors for enhanced efficiencies. This approach necessitates a profound understanding of both current and historical cash flow patterns, potentially lowering costs linked to external services. However, achieving a high level of accuracy and relevance using in-house forecasting demands substantial expertise, time, and resources.

Outsourcing

Outsourcing cash forecasting to a specialized provider like logicpath offers several advantages. External experts bring dedicated knowledge and sophisticated tools to the table, often providing real-time insights and predictive analytics that may be challenging to replicate in-house. This can lead to more accurate forecasts, better cash flow management, and potentially lower overall costs through economies of scale. Outsourcing also frees up internal resources, allowing your team to focus on core competencies and strategic initiatives.

Considerations

When evaluating these options, consider factors such as cost-effectiveness, the complexity of your cash supply chain operations, regulatory compliance, and the need for scalability. In-house solutions provide control and customization but require ongoing investment in technology and personnel. Outsourcing offers expertise and efficiency but requires careful vendor selection and management to ensure alignment with your objectives.

11 Questions to Ask Your Team:

1. How will the team ensure that branches/ATMs/vaults are consistently ordering or shipping what is needed?
2. How often and what metrics will we use to measure success in this new approach to cash ordering?
3. What are the primary objectives we aim to achieve with this initiative?
4. If reducing excess cash is a goal, what percentage reduction are we targeting and by when?
5. What strategies will we implement to improve operational efficiency?
6. How will we forecast our cash needs moving forward?
7. What is the estimated timeline for completing and maintaining this project?
8. How will we pivot cash ordering for seasonality, holidays, and outlying events?
9. If we reduce excess idle cash in the network, what can we do with it?
10. Does our team understand confidence levels, demand planning, lean process and forecasting the future?
11. How will the team manage to usage instead of to a limit?
12. Is the approach reactive or proactive regarding cash ordering and depositing?

Exploring the services offered by logicpath can provide insights into how outsourcing cash forecasting can benefit your organization, offering specialized expertise and advanced tools to optimize your financial management processes. Below, is a helpful diagram to assess in-house vs. outsourcing control and cost efficiency in the cash cycle.

Source: chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Financial-Services/gx-fsi-ca-optimizing-the-retail-bank-supply-chain-2013-10.pdf

To find out more about why clients outsource with logicpath, book a free one-hour demo here.