Navigating tomorrow - the power of forecasting in the payments industry

CatalystPay #PointOfView is a series, in which our skilled crew is sharing their point of view and industry insights on online payment. In our latest installment, Ekaterina Peneva, CFO, shares her view on the importance and challenges of forecasting in the payments industry. 

Don't miss out on this opportunity to learn from "the kitchen" in the industry. Stay tuned for more expert articles in the coming weeks.

 

At CatalystPay, we are devoted to developing forecasts to help us estimate our future performance. On the one hand, we do this to set our business targets, our resource plan, our remuneration performance and so on. On the other hand, we use these forecasts to keep up with the highly competitive, ultra volatile payments industry. 

Because of all the changes and the fast pace at which this vertical evolves, the ability to make precise forecasts is more than an insightful boardroom exercise, it’s a critical tool to drive growth, ensure liquidity, and stay agile. Forecasting means we gather data, and then turn it into actionable insights to make sure that our product is future proof, and that our customers are in safe hands. 

But most importantly, we’re aware that merchants need payment partners who are not reactive, but proactive. Precise forecasting is a commitment to navigating uncertainties. By understanding insights and tapping into the science of forecasting, we at CatalystPay aim to offer our merchants an edge – a partnership grounded in insights, agility, and informed decisions. 

Why payments forecasting matters 

As a merchant, understanding future cash flows is more than an accounting necessity, it is more of a strategic need, and these are the main reasons why it matters to have reliable data on your side:

• Capitalizing on Growth. Our growth is directly related to what the market needs - in order to provide this to the best of our abilities without losing any of the competitive advantages we’ve created so far, we rely on industry insights to help us offer the best quality we can. This applies to us at CatalystPay just as much as it applies to our customers - being on top of industry trends allows us to improve our product, and our customers to adapt their strategies and stay competitive by using future ready services with intuitive integrations and the latest functionalities.

• Informed Decision Making. As a payment service provider, access to quality forecasting means insights into potential sales peaks and troughs. This knowledge empowers us to make informed decisions, not just related to the way we conduct business, but also to future development directions of our products and services. In order to stay flexible and relevant for you, we have to rely on data. 
• Improving Supplier Relationships. Timely payments and accurate cash flow predictions foster trust and can lead to better negotiation terms, bulk discounts, and priority deliveries. This means that all partnerships were small in their beginning, but we’re fostering long term relationships with suppliers and business partners to ensure stability and reliability. 
• Financial Health & Liquidity. At its core, payments forecasting is about anticipating the money coming in and going out of a business. Accurate forecasting ensures that merchants maintain a healthy cash flow, which is crucial for meeting operational expenses, from inventory procurement to payroll. Put simply, in order to accommodate growth and flexibility, we have to first make sure that we’re covering the basics.  

Why forecasting challenges are worth it

Like any other insightful process, forecasting comes with its challenges. We like addressing them head on, and talking about the process of staying on top of industry trends, as it generally requires a great deal of planning and resource allocation. So here are are few of the most important challenges that we enjoy tackling as part of our monthly forecasting activities:  

• Creating short-term forecasts frequently means having accurate data

Creating forecasts monthly brings us numerous benefits, such as:

• an accurate estimate of the future cash flows to ensure available liquidity for short-term needs, such as borrowing;
• easier adjustment to the challenges of the market;
• make us more agile, gives us  better business intelligence, and fuel growth
• and much more…
• Short term predictability of volumes means higher adaptability

Due to the specifics of the dynamic industry we operate in, sales volumes are very unlikely to be accurately predicted on a medium or long term.  

• Improving the forecasting model over time (variance analysis) means staying relevant

Variance analysis is a standard tool for determining the difference between budget estimates and actuals which is currently prepared manually; it is challenging to manage multiple forecast models at the same time for real-time comparison.

It is clear that forecasting is mandatory for all companies and especially for those in such a dynamic environment such as the payment industry, thus why everyone tries to be more precise and follow all available channels to stay informed and prepare for the future.

Conclusion 

Every activity we conduct here at CatalystPay has our customers right in the middle of it. This is why it’s relevant for us to make sure that: 

• We provide the best options and partnerships available on the market,
• We stay competitive through our overall features and partnerships,
• We can accommodate futureproof growth,

all so we can be a better payment service partner than we were the day before. Contact us if interested to know how we can help! 

 

You may also like the #PoV article "Challenges Merchants Face During Onboarding and Merchant Account Opening"