Agentic Cash Forecasting: When financial mathematics becomes the tool of your digital employee

Cash Management is the strategic and operational management of a company's cash flows to ensure that it can efficiently meet its short-term obligations. The goal is to have sufficient liquid assets at the right time and in the right account while minimising idle balances. The short-term cash forecast plays a central role in this: it enables the operational control of liquidity, ensures that sufficient funds are available at all times, and ensures that surpluses are optimally utilised.

In this article, we present current constraints and challenges, as well as the opportunities presented by our approach to Agentic Cash Forecasting. We demonstrate how the combination of mathematical models and agentic reasoning improves forecasting quality, how AI agents deal with uncertainties, noise, and missing or incorrect data, and how you can make use of these opportunities with minimal effort in your company.

Cash Forecasting - Status Quo

A precise cash forecast is the foundation for well-informed operational financial decisions. It helps determine when liquidity needs to be provided, which liabilities can be strategically deferred, and when advanced or delayed payments are prudent. It also influences key processes such as intelligent payment management, control of credit lines, or optimisation of working capital.

A good short-term forecast integrates data points from both structured and unstructured sources, including:

• AP and AR invoices from the ERP system to map expected inflows and outflows.

• Bank transaction history (e.g., 12 months), enriched by intelligent categorisation of payments to identify recurring operational expenses such as wages, rent, energy costs, or tax provisions.

• Current bank transactions that immediately affect the account balance.

• Personnel planning, e.g., for anticipating salary developments.

• Investment plans with relevant payment schedules.

• Budget plans to represent planned incomes and expenditures.

• Special payments such as bonuses, dividends, refunds, or one-off project costs.

• Other external factors such as delivery delays, seasonal demand fluctuations, or planned maintenance shutdowns.

While ERP data and account histories are available in structured form (ERP data is sometimes incompletely recorded) and can flow directly into the forecast, many of the additional signals are less structured and cannot easily be incorporated as parameters into a traditional model.

Challenges and Untapped Potential

Even large medium-sized companies (>250 million annual turnover) often do not run systematic cash management for daily operations - often due to a lack of dedicated personnel. This leads to missed interest optimisation opportunities, overlooked early warning signs of liquidity bottlenecks, and inflexible, purely rule-based payment flows that do not respond to dynamic events.

Companies that use cash forecasting often struggle with the integration of data sources. The incorporation of additional information is often manual and time-consuming, and many forecasts do not provide an explanation of which specific events influence the prediction. Statistical noise, low confidence levels, or outliers - such as a very large customer order in a month - can significantly reduce the quality of the forecast. Poor cash forecasting makes strategic cash management impossible.

Agentic Cash Forecasting - The Future of Cash Management

This is where agentic AI comes in. Let's take a closer look at “Flow”. Flow is our digital employee for cash management. It:

1. Uses mathematical cash forecasting models as a tool - situationally parameterisable for different scenarios, e.g., to predict payment timings accurately.

2. Prioritises and enriches data - the agent marks special payments (payroll, taxes, rent, large projects) and anticipates their occurrence. The historical categorisation of payments (“tagging”) allows for the early incorporation of recurring obligations, even if they are not (yet) listed as open items in the ERP.

3. Interprets results through agentic reasoning - the agentic thought process based on a large language model - identifies low model confidences and selectively supplements relevant additional information.

4. Communicates and collaborates proactively - The agent asks questions of team members like a human cash manager, gathers information, and points out any anomalies before they become a problem.

5. Incorporates unstructured and external information - e.g., internal project plans, delivery status, or upcoming special payments, to make the forecast more accurate.

The combination of deterministic elements (mathematical models, logical rule sequences) and agentic reasoning (flexible interpretation, contextual understanding, incorporation of unstructured data sources) creates a comprehensive and explainable forecast. 

Unlike traditional software, AI agents can operate like employees and, together with other team members in the finance team, identify relevant information, link data sources, and thus create a well-founded basis for decisions. This allows even companies that do not currently have a dedicated (human) cash manager to establish structured cash management within the company.

Existing solutions are replaced: instead of static cash forecasts, an AI agent for cash management provides precise, context-sensitive, and collaborative support – acting as true digital employee. The combination of deterministic mathematical models with agentic reasoning improves forecasting quality, transparency, and the ability to take action, enabling strategic cash management with measurably better financial results. 

If you would like to experience our cash manager “Flow” live or if it sounds like the missing piece in your finance team, then let's have a conversation.