How AI is helping accountants predict and prevent a cash crunch

Cash flow forecasting is vital for every business. It cautions against approaching cash shortages. This provides the decision makers with ample time to intervene with corrective action even before a crisis emerges. Forecasting assists accountants and business leaders in re-adjusting the costs. They can secure financing or renegotiate payment terms. These measures can keep the business running well and prevent missed payments or obligations.

An early detection of a cash crunch is essential since insufficient liquidity may pose risks to the functioning of a business and may require tough choices, such as reducing expenses or halting expansion efforts. Proactive cash forecasting supports strategic planning, enables businesses to deal with uncertainty, and builds trust with investors, lenders, and other stakeholders.

Shortcomings of Conventional Cash Flow Forecasting

1. Spreadsheets and Historical Data

Most companies use spreadsheets to track and forecast cash flows. While they are popular, they become a problem as the business grows. They require manual updates and reconciliations across multiple accounts. The forecasts made using spreadsheets are based on historical data trends. Tracking of past performance does not guarantee accurate future predictions. Changes in the business, customer behaviour and market disruptions make these historical models obsolete.

2. Manual Analysis and Human Error

Data collection/entry is manual and time-consuming. Finance teams have to collect information from various sources, standardise it, and continuously verify the accuracy. False data can be recorded due to human errors such as duplicate entries, misclassification of information, and failure to record certain transactions. It can be hard to predict based on this data.

3. Limitations in Timeliness and Accuracy

Manual, static processes make timely insights impossible. Forecasts are based on assumptions about customer payment behaviour, sales velocity or market conditions, any of which can be wrong in volatile markets.

Fluctuations in the economy, changes in regulation, and disruptions in supply, among other random external forces, cannot be sampled through static, assumption models, and typically surprise companies.

AI Enters the Scene: How It Works

Artificial intelligence changes the way accountants can forecast cash flow. There will be no dependence on past trends and manual inputs anymore. Advanced machine learning tools (neural networks and ensemble methods) are powering AI-powered systems to identify patterns and predict outcomes with far better accuracy. The systems connect to the tools you already use. That is, ERP systems, CRMs, invoicing and even bank platforms can be linked together within a single flow of data. Thus, AI will have access to up-to-date sales and supplier invoicing data and customer payment records. As soon as the data is in, AI doesn’t just hold it; AI learns from it. By processing this in real time, AI can spot early warning signs of a cash crunch, which can be a sudden slowdown in payments from key customers or a spike in operational expenses.

Pattern recognition is one of AI’s strongest advantages. It can detect subtle trends that humans might overlook. For example, the fact that a certain client tends to delay payments after their busy season. With this foresight, accountants can act before these issues cause serious cash flow strain.

In practice, this means forecasts become dynamic and continuously updated. Instead of a static document that reflects last month’s assumptions, an AI-driven forecast reflects the business’s current reality and its probable future.

For accountants, this isn’t just about efficiency; it’s about elevating their role as strategic advisors. SaaS companies like Pulse makes this transition easier. By combining machine learning with real-time data aggregation, Pulse’s aiPredict module helps accountants anticipate cash flow pressures before they escalate and run scenario modelling to explore the potential impact of different business decisions. This will provide them and their clients with the time needed to make wise, reasonable decisions and decide on the most resilient way forward.

Hypothetical Scenario

An accountant uses Pulse’s aiPredict to review a client’s live sales, receivables and expenses. The AI flags a cash shortfall in 6 weeks due to delayed payments from 2 big customers. Using scenario modelling, the accountant tests options like offering early payment discounts and adjusting supplier terms. The updated forecast shows the shortfall gone, so the client can act early, avoid a liquidity crisis and keep the business on track.

What The Future Holds

AI does not come to replace accountants’ jobs but to enhance their worth. By allowing AI to do the number crunching instead, teams will gain more clarity at a faster speed. Spotting potential risks early becomes easier that way. Then you’ve got more time for advising on big-picture moves.

Financial surprises pop up all the time these days. Companies leaning on AI-powered accounting? They’re better positioned to adapt quickly and stay ahead.

Meet the mypulse team on stand G20 at Accountex Summit Manchester, taking place at Manchester Central on 23 September 2025.  

For further information, please visit www.accountexmanchester.com

Book your free ticket here.

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