{"id":9851,"date":"2023-07-22T05:57:11","date_gmt":"2023-07-22T09:57:11","guid":{"rendered":"https:\/\/www.sage.com\/en-ca\/blog\/?p=9851"},"modified":"2023-07-18T06:49:45","modified_gmt":"2023-07-18T10:49:45","slug":"increasing-recession-cash-flow-with-ai-and-predictive-analytics","status":"publish","type":"post","link":"https:\/\/www.sage.com\/en-ca\/blog\/increasing-recession-cash-flow-with-ai-and-predictive-analytics\/","title":{"rendered":"Increasing Recession Cash Flow with AI and Predictive Analytics"},"content":{"rendered":"<header class=\"entry-header has-dark-background-color entry-header--has-illustration entry-header--has-illustration--generic\">\n\t<div class=\"container\">\n\t\t<div class=\"entry-header__row row align-center\">\n\t\t\t<div class=\"col col-lg-7 col-xlg-6 entry-header__content\">\n\t\t\t\t\t\t\t<div class=\"component component-single-header\">\n\t\t\t\t\t\t\t\t\t\t<div class=\"entry-header__misc text--subtitle text--uppercase text--small\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-ca\/blog\/category\/money-matters\/\" class=\"entry-header__link\">Money Matters<\/a>\t\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t<div class=\"entry-title-wrapper\">\n\t\t\t\t\t<h1 class=\"entry-title\">\n\t\t\t\t\t\tIncreasing Recession Cash Flow with AI and Predictive Analytics\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t<p class=\"entry-header__description\">\n\t\t\t\t\t\t\t\t\t\t\t<\/p>\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\n\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n\t<div class=\"single-post-details container\">\n\t\t<div class=\"col\">\n\t\t\t<span class=\"posted-on \"><time class=\"entry-date published\" datetime=\"2023-07-22T05:57:11-04:00\">July 22, 2023<\/time><\/span><span class=\"reading-time\"> min read<\/span>\n\t\t<button\n\t\t\ttype=\"button\"\n\t\t\tclass=\"social-share-button button button--icon button--secondary js-social-share-button\"\n\t\t\tdata-share-title=\"Increasing Recession Cash Flow with AI and Predictive Analytics\"\n\t\t\tdata-share-url=\"https:\/\/www.sage.com\/en-ca\/blog\/increasing-recession-cash-flow-with-ai-and-predictive-analytics\/\"\n\t\t\tdata-share-text=\"Please read this interesting article\"\n\t\t>\n\t\t\t<span class=\"social-share-button__share-label\">Share<\/span>\n\t\t\t<span class=\"social-share-button__copy-label\" hidden>Copy Link<\/span>\n\t\t\t<span class=\"social-share-button__copy-tooltip\" aria-hidden=\"true\" hidden>Copied<\/span>\n\t\t<\/button>\n\n\t\t\t\t<\/div>\n\t<\/div>\n<\/header>\n\n\n<div class=\"wp-block-post-author has-dark-background-color alignfull\">\n\t<div class=\"container\">\n\t\t<div class=\"col\">\n\t\t\t\t\t\t\t<div class=\"co-authors\">\n\t\t\t\t\t\n\t\t<div class=\"entry-author-wrapper\">\n\t\t\t<a class=\"entry-author\" href=\"https:\/\/www.sage.com\/en-ca\/blog\/author\/david-appel\/\">\n\t\t\t\t<img alt='David Appel' src='https:\/\/www.sage.com\/en-ca\/blog\/wp-content\/themes\/sage\/dist\/images\/avatars\/author-fallback.svg' srcset='https:\/\/www.sage.com\/en-ca\/blog\/wp-content\/themes\/sage\/dist\/images\/avatars\/author-fallback.svg 2x' class='avatar avatar-40 photo avatar-default entry-author__image' height='40' width='40' \/>\t\t\t\t<span class=\"entry-author__name\">David Appel<\/span>\n\t\t\t<\/a>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n<\/div>\n\n\n\n<p class=\"\">During a recession, your priorities as a SaaS CFO shift somewhat.&nbsp;<\/p>\n\n\n\n<p class=\"\">In more abundant markets you\u2019re freer to balance exploration and preservation. While some blend of those two is always needed in financial leadership, recessions call for a heightened emphasis on cash flow.&nbsp;<\/p>\n\n\n\n<p class=\"\">Specifically on lengthening your cash runway by eliminating resource drains, managing churn, and automating financial processes. In this post, we\u2019ll discuss how you can use AI and predictive analytics to thrive despite poor market trends.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">SaaS recession performance: Manual accounting vs. AI<\/h2>\n\n\n\n<p class=\"\">In modern SaaS accounting, finance leaders\u2019 choice of technology has a far-reaching impact on firms\u2019 recession performance.&nbsp;<\/p>\n\n\n\n<p class=\"\">Let\u2019s take a quick look at two different approaches to recession management: manual accounting and cloud-based automation.&nbsp;<\/p>\n\n\n\n<p class=\"\"><strong>Manual recession management&nbsp;<\/strong><\/p>\n\n\n\n<p class=\"\">As we mentioned at the outset of this post, cash is king during a recession. You want to do everything in your power to preserve and increase cash flow and cash on hand.&nbsp;<\/p>\n\n\n\n<p class=\"\">Unfortunately, legacy accounting systems make this extremely difficult\u2013and actually exert force in the opposite direction\u2013for a number of reasons.&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Departments update their data independently, making it hard to get a quick, unified view of your firm\u2019s financial health.&nbsp;<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The lack of a single source of truth (SSOT) leads to revenue leakage.&nbsp;<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Manual forecasts lack the range and flexibility for effective long-term planning, further shortening the cash runway.&nbsp;<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Manual reporting lacks the financial detail that SaaS companies depend on to see them through hard times. The importance of data-driven recession management can\u2019t be overstated.&nbsp;<\/li>\n<\/ul>\n\n\n\n<p class=\"\">How does automation compare to legacy tech during a recession?<\/p>\n\n\n\n<p class=\"\"><strong>Automated recession management&nbsp;<\/strong><\/p>\n\n\n\n<p class=\"\">Cloud-based financial management software equipped with AI and predictive analytics can help SaaS companies regain clarity during financial storms.&nbsp;<\/p>\n\n\n\n<p class=\"\">A few particularly potent benefits of automation for recession management include:&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Financial process automation leads to optimized resource management.&nbsp;&nbsp;<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The ability to eliminate the close: cloud-based accounting software continuously closes your books with each transaction, instead of leaving teams scrambling to do it all at once. In a recession, who has time for that?&nbsp;<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Multi-factor forecasting becomes as simple as entering your starting data and clicking a button.&nbsp;<\/li>\n<\/ul>\n\n\n\n<p class=\"\">Why else should SaaS finance teams embrace AI in the midst of a recession?<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">AI can extend your cash runway<\/h2>\n\n\n\n<p class=\"\">As we mentioned, your cash runway becomes extremely important during a recession.&nbsp;<\/p>\n\n\n\n<p class=\"\">The main reason to invest in AI is that it allows you to manage your cash flow more effectively in good times and bad.&nbsp;<\/p>\n\n\n\n<p class=\"\">Let\u2019s look at some specific ways that AI can help SaaS accounting departments lengthen their cash runway.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Identify cash-drains faster&nbsp;<\/h3>\n\n\n\n<p class=\"\">During a recession, you need to do everything you can to spot and eliminate suboptimal uses of cash.&nbsp;<\/p>\n\n\n\n<p class=\"\">This is achieved by using AI to generate granular financial reports, allowing you to instantly identify what\u2019s working and what\u2019s not.&nbsp;<\/p>\n\n\n\n<p class=\"\">We already touched on a significant cash-drain for many SaaS organizations\u2013the monthly close.&nbsp;<\/p>\n\n\n\n<p class=\"\">A few other common cash thieves include failed payments from manual processing, poor fund allocation due to high budget variance, and wasted time from manual reporting and forecasting.&nbsp;<\/p>\n\n\n\n<p class=\"\">How else can AI contribute to your cash runway and cash flow during recessions?<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Boost sales and marketing effectiveness<\/h3>\n\n\n\n<p class=\"\">When SaaS companies opt for cloud-based accounting software with AI, the resulting impacts extend well beyond the finance team. Sales and marketing see considerable improvements as well, directly impacting your cash position.&nbsp;<\/p>\n\n\n\n<p class=\"\">Thanks to your SSOT, you\u2019ll have seamless access to sales and marketing data that\u2019s continuously updated in real time.&nbsp;<\/p>\n\n\n\n<p class=\"\">This helps finance leaders link up with sales and marketing leaders for proactive problem-solving, strategizing, and campaign performance monitoring.&nbsp;&nbsp;&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Managing churn with AI&nbsp;<\/h2>\n\n\n\n<p class=\"\">Churn is something that SaaS finance leaders can\u2019t afford to tolerate when the markets dip.&nbsp;<\/p>\n\n\n\n<p class=\"\">AI and predictive analytics can help you skillfully manage and swiftly respond to both voluntary and involuntary churn.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Voluntary churn<\/h3>\n\n\n\n<p class=\"\">Voluntary churn occurs when users grow dissatisfied with your product and unsubscribe.&nbsp;<\/p>\n\n\n\n<p class=\"\">During a recession, high rates of voluntary churn can add significant strain to the baseline stress of poor market conditions.&nbsp;<\/p>\n\n\n\n<p class=\"\">AI and predictive analytics help SaaS CFOs take control of voluntary churn by:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Enhancing billing and pricing flexibility: <\/strong>A well-timed discount campaign or a retooling of your pricing strategy can help keep users from leaving.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Forecasting churn trends: <\/strong>The problem with churn is that it often starts slowly. This can lead to finance leaders not picking up on the long-term severity of problematic trends until they get out of hand. Early intervention is key to recession churn management\u2013which is vital for recession cash flow.&nbsp;<\/li>\n<\/ul>\n\n\n\n<p class=\"\">How can AI help SaaS companies eliminate involuntary churn?<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Involuntary churn<\/h3>\n\n\n\n<p class=\"\">Involuntary churn occurs when customers\u2019 payment methods are out of date and can\u2019t be processed.&nbsp;<\/p>\n\n\n\n<p class=\"\">With most manual systems, the user is either unsubscribed at that point, or the payment card is tried again in a few days with the same result.&nbsp;<\/p>\n\n\n\n<p class=\"\">Cloud-based financial management software takes care of this through automated dunning emails.&nbsp;<\/p>\n\n\n\n<p class=\"\">A dunning email is a simple message notifying the customer that they need to update their payment info and that you\u2019ll run the charge again in 3 to 5 days.&nbsp;<\/p>\n\n\n\n<p class=\"\">It\u2019s a hands-off way to completely eliminate involuntary churn (the cost of which can add up quickly).&nbsp;&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Cloud-based automated forecasting&nbsp;<\/h2>\n\n\n\n<p class=\"\">In a recession, you often need to think creatively about discount campaigns, cross-sell ideas, new billing tactics, and other strategies that will allow you to tip the scales back in your favor.&nbsp;<\/p>\n\n\n\n<p class=\"\">Automated forecasting has the horsepower to handle all of that.&nbsp;<\/p>\n\n\n\n<p class=\"\">In addition to forecasting to find and create opportunities, you\u2019ll also be able to run forecasts to look for troubling trends. Rooting out potential problems is much easier with robust automated forecasts and predictive analytics.&nbsp;&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Learn what you need to succeed<\/h2>\n\n\n\n<p class=\"\">Cloud-based forecasting, AI, and predictive analytics are essential ingredients for SaaS accounting success. The effectiveness and agility made possible by cloud-based workflows have allowed many SaaS accounting departments to rapidly level up their results. But there\u2019s something even more important to consider than external strategies or tech: making an investment in yourself.&nbsp;&nbsp;<\/p>\n\n\n\n<p class=\"\">The Modern SaaS Finance Academy is an online academy created by SaaS finance and accounting leaders and experts. It features a curated course list that focuses on the most critical skills for finance and accounting professionals to develop in order to thrive in the coming years and decades. Lesson topics include frameworks for reporting to your board, innovative AR design, revenue recognition strategies, and much more.&nbsp;<\/p>\n\n\n\n<p class=\"\"><a href=\"https:\/\/sageu.com\/modernsaasfinance\/?utm_source=organic&amp;utm_medium=sageu&amp;utm_campaign=organic\">Click here<\/a> to join today.<\/p>\n\n\n\n<p class=\"\"><\/p>\n\n\n<div class=\"single-cta\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">Subscribe to the Sage Advice Newsletter<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p class=\"cta-content__title\">Get a roundup of our best business advice in your inbox every month.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-8949a954-88b2-43bb-8b8a-77c53eb34350\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Subscribe<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1440\" height=\"810\" src=\"https:\/\/www.sage.com\/en-ca\/blog\/wp-content\/uploads\/sites\/12\/2022\/04\/GettyImages-1073797282-1440x810.jpg\" class=\"single-cta__image\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-ca\/blog\/wp-content\/uploads\/sites\/12\/2022\/04\/GettyImages-1073797282-1440x810.jpg 1440w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>You can\u2019t prevent recessions. But you can increase recession cash flow with AI and predictive analytics<\/p>\n","protected":false},"author":1433,"featured_media":9598,"menu_order":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_sage_video":false,"post_featured_image_hide":false,"footnotes":""},"categories":[7],"tags":[258,171],"business_type":[99],"lilypad":[],"context":[],"industry":[],"persona":[],"imagine_tag":[],"coauthors":[314],"class_list":["post-9851","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-money-matters","tag-cloud-financial-management","tag-cloud-technology","business_type-medium-business"],"sage_meta":{"region":"en-ca","author_name":"David Appel","featured_image":"https:\/\/www.sage.com\/en-ca\/blog\/wp-content\/uploads\/sites\/12\/2023\/04\/GettyImages-626621552-768x585-1.jpg","imagine_tags":[]},"distributor_meta":false,"distributor_terms":false,"distributor_media":false,"distributor_original_site_name":"Sage Advice Canada English","distributor_original_site_url":"https:\/\/www.sage.com\/en-ca\/blog","push-errors":false,"_links":{"self":[{"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/posts\/9851","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/users\/1433"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/comments?post=9851"}],"version-history":[{"count":0,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/posts\/9851\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/media\/9598"}],"wp:attachment":[{"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/media?parent=9851"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/categories?post=9851"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/tags?post=9851"},{"taxonomy":"business_type","embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/business_type?post=9851"},{"taxonomy":"lilypad","embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/lilypad?post=9851"},{"taxonomy":"context","embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/context?post=9851"},{"taxonomy":"industry","embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/industry?post=9851"},{"taxonomy":"persona","embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/persona?post=9851"},{"taxonomy":"imagine_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/imagine_tag?post=9851"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/coauthors?post=9851"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}