In today’s business landscape, cash is still critical, but predictability has become foundational. For SMEs and mid-cap firms, the ability to anticipate future cash positions is now central to both strategic planning and day-to-day decision-making. Yet many banks continue to treat cash flow forecasting (CFF) as a peripheral feature rather than a core service. That’s a strategic gap – and one that forward-looking banks can turn into an advantage.
With markets still unpredictable and financing costs staying high, CFF has moved to the top of the agenda for corporate finance teams. It’s become a practical necessity – not just for planning, but for managing risk and making better decisions. Banks that respond to this demand can not only deepen client relationships but also reposition themselves as proactive, data-driven partners in financial decision-making.
The liquidity wake-up call
Liquidity isn’t a new concern – but it has become a far more immediate one. The pandemic, followed by macroeconomic uncertainty, forced businesses to examine their financial health in real time. Many learned the hard way that a (sudden) lack of liquidity – not lack of profit – is often what causes businesses to fail.
CFOs and treasurers are now under pressure to manage cash proactively. They’re expected to provide daily or even intra-day insights into liquidity across entities, geographies, and currencies. This includes monitoring inflows, outflows, debt obligations, and operational commitments in real time—and projecting future positions with confidence.
Yet according to HSBC’s 2024 Corporate Risk Management Survey, 93% of corporate treasurers reported that inaccurate CFF data had led to avoidable losses – often caused by overborrowing or unexpected liquidity gaps. The cost of poor forecasting is not theoretical – it’s being measured in real financial losses.
Based on the same study, more than 50% of treasurers in EMEA identified poor data quality as the biggest barrier to effective FX hedging, pointing to a deeper, systemic issue around fragmented and unreliable forecasting inputs.
New data from EY-Parthenon reinforces this challenge: a seven-year study of over 2,400 of the world’s largest companies (2017–2023) revealed that only 28% of free cash flow (FCF) forecasts were accurate within ±10%, compared to 60% for revenue forecasts. Furthermore, 51% of FCF forecasts underperformed guidance, while 47% exceeded it – highlighting how difficult it remains for businesses to predict liquidity with any precision.
Forecasting is no longer optional
Businesses – particularly those in the SME and mid-market space – are increasingly looking to their banking providers to support them with more than just payments and lending. They want tools that help them anticipate and prepare.
CFF stands out for three key reasons:
1. It drives daily decisions
Forecasting is not a quarterly exercise. It’s a daily activity that informs operational and strategic choices: Can we afford that inventory order next week? Will we breach a debt covenant if a major customer delays payment? Can we safely distribute dividends or repurchase shares?
Offering forecasting tools makes the bank part of the client’s everyday financial decision-making.
2. It enables smarter use of banking products
Forecasting connects directly to the use of other financial products. For instance, a forecasted shortfall might trigger a working capital loan or overdraft, while a projected surplus could lead to investment product recommendations. This turns the bank’s service into an insight-driven platform, rather than a reactive product menu.
3. It strengthens the advisory role
As treasury becomes more strategic within organizations, CFOs expect banks to provide real-time insights, not just statements. Forecasting tools – especially those integrated into business banking platforms – help banks evolve from transaction processors into true financial partners.
This shift is already underway. The 2025 Global Treasury Survey from PwC revealed that 76% of treasury teams cite poor data quality, and 53% point to lack of adequate tools as major hurdles to accurate forecasting.
EY’s study found that over one-third (36%) of cash-flow forecasts missed targets by more than 10%, which underscores why corporate finance teams are calling for better tools – and why banks have a role to play in delivering them.
Chart 1: Free Cash Flow Guidance Performance
Based on results from 2017 to 2024 across ~ 200 forecasts
Source: EY Parthenon
Why existing solutions often fall short
As cash flow forecasting (CFF) becomes more central to financial decision-making, businesses are exploring a range of tools to support it. While larger firms often rely on dedicated Treasury Management Systems (TMS), many mid-sized and smaller companies operate under tighter budget constraints and continue to use spreadsheets or simpler tools – out of necessity rather than preference.
These approaches make it harder to connect real-time bank data with operational systems like ERPs and payment platforms. Even when forecasting tools are in place, ensuring data quality and integration remains a challenge, particularly in areas like FX risk management.
This highlights a real opportunity for banks to support clients with more accessible, cost-effective solutions that deliver insight without the complexity or price tag of full-scale TMS platforms.
What businesses need from banks
Business clients aren’t just asking for data. They want trusted, actionable insights – delivered in real time, embedded into their workflows, and tailored to their unique financial structure.
From the bank’s side, that means offering forecasting capabilities that are:
- Data-rich: Pulling live data from bank accounts and, where possible, connected ERP/accounting platforms.
- User-centric: Designed for the actual users – CFOs, controllers, treasury managers – not for IT departments.
- Predictive: Going beyond reporting to include forward-looking analytics, alerts, and intelligent suggestions.
- Connected: Operating within existing digital channels (online banking, mobile apps) or via APIs integrated into external platforms.
- Solution-driven: connected to a bank’s debit and credit products
- Actionable: Linked to other banking products – so insights can be directly converted into decisions or transactions.
The strategic role of banks
Forecasting is more than just a value-added feature. It’s a strategic touchpoint that enables banks to embed themselves more deeply into their clients’ operational rhythms.
By offering CFF, banks can:
- Enhance client retention through frequent, high-value interactions.
- Increase product uptake by contextualizing lending, FX, or investment options based on forecasted needs.
- Gain better insight into client liquidity behavior, improving credit risk assessment.
- Differentiate their offering in a competitive landscape where fintechs are gaining ground.
Moreover, forecasting serves as a natural entry point into a broader treasury proposition. Banks that start with CFF can expand into cash pooling, FX risk management, working capital optimization, and ERP-integrated payment workflows – creating a modular ecosystem of services that grows with the client.
The way forward
Business banking is changing fast. Relationship managers are no longer the sole touchpoint. Instead, the quality of the digital experience – and the intelligence embedded within it – defines whether clients stay or look elsewhere. For this to work, a bank’s front office needs to be well equipped and trained in order to facilitate clients in building up CFF knowledge and experience.
Banks can’t afford to ignore this shift. Offering CFF isn’t just about checking a box. It’s about delivering the kind of tools businesses now expect from their financial partners: real-time, predictive, and embedded in their daily operations.
To succeed, banks must adopt a new mindset: one where their role is not just to facilitate transactions, but to enable foresight. CFF is where that shift begins.
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