Short term financial liquidity prediction: a behavioural analysis impact
Creating a Short term financial liquidity forecast dashboard is fairly simple from the technical point of view: All you need is to group all the data from the invoices received, invoices sent and to predict the trends in cash receivables end expenses.
The reorganisation of some business processes is somewhat harder: the process of registering invoices at the payment time must be altered. All invoices should be registered as soon as they arrive to the company and no, as usually ta the payment day.
Nevertheless, the important and the hardest part is to accurately predict if the payment will be executed in time. Of course, it is a cultural affected issue: in some environments, we need to predict if the invoice will be paid before the due date, while in others the number of days in delay and the probability of default is at stake. A skilled financial officer knows, based on previous experiences, how a debtor will act in a certain instance. The payment related behaviour is not as indistinguishable as it seems at first sight. It resembles the debtor capacity and motivation to pay the invoice. The capacity can be easily accessed by using external data sources, while assessing the motivation is a bit trickier.
The behavioural patterns analysis might be the key to successfully asses the later.