Cash Forecasting & Cash Order System for a Pay Day Loan Company

About Client

The client is Canada’s largest consumer finance retailer operating hundreds of stores across the country offering a wide range of financial services for their customers.

The Background

  • Reliable cash management is critical for the financial services industry. Some businesses have a need for more complex forecast systems than the others. Especially in the financial services industry where the regulations are tight. Forecasts have a significant part to play in maximizing revenue. Hence, it is important to optimize cash management using cutting-edge technology.

The Challenge

  • The client’s existing analytics system, which was used to estimate cash order quantity and end-of-day balance, was primarily based on analysis of limited store-wise variables. This resulted in suboptimal availability of cash and at times in surplus cash. This led to money lying unutilized or cash deficit that prevented lending activities to customers, causing losses in revenue.

Our Solution

Bizacuity was involved in the design and development of structured solution framework which consisted of the following steps:

  • The various components in the Cash Flow were evaluated and analyzed to determine the volume and percentage of change with peak and trough periods in the time series.
  • Various time series forecasting algorithms were tested to determine the most accurate and viable option. Out of the different algorithms, the Weighted Moving Averages Algorithm with an additional parameter to capture the seasonality in the time-series, was selected and implemented.
  • A system integrating the Client’s web interface to this new model was formulated. This enabled the Cash order recommendations to be displayed on the Client’s web interface.

The Outcome

An accurate forecasting of the Cash Balance reduced the risk of holding surplus cash overnight across stores. This decreased the cost of idle money for the company and in turn added to the top-line growth of the firm.

The Cash Ordering and Forecasting Model resulted in reduction on the Residual Cash by

across all branches.

The new flexible system allowed change in the Cash Ordering schedule for unforeseen circumstances.

The Ordering process is rendered easily through the interface with the display of baseline recommendations.

Simplified reporting and monitoring of Cash Flow was instrumental in addressing changing Cash Flow trends in a timely manner.

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