How to Forecast Cash Flow in a High-Growth Mode: SmarterTravel

Key takeaways

SmarterTravel, founded in 1998 and based in Cambridge, MA, leverages AI to offer personalized hotel booking experiences and travel blog subscriptions, generating $18 million in revenue in 2023 with close to 5 million active subscribers and 40 employees across the US and Thailand.
The company faces unique cash flow management issues due to a business model in which customer payments are received upfront but hotel suppliers are paid after customer check-out, necessitating precise tracking of liabilities and liquidity for operational decisions.
By adopting Agicap’s cash flow management software, SmarterTravel’s finance team reduced time spent on cash forecasting, gained real-time financial visibility, and improved reporting, freeing up resources for further financial transformation and company growth

Industry:
Accommodation and catering
Size:
SME (10-50M turnover)
Where:
Cambridge, Mass., USA

Use cases:
Financing and controlling working capital, Daily cash monitoring, Making forecasts more reliable, Automate reporting, High WCR

Customer’s history

SmarterTravel was founded in 1998 and is located in Cambridge Mass. Leveraging AI and machine learning, the startup is building consumer-centric online travel experiences which offer both a wide range of selection and personalised recommendations for booking hotels. The data-driven company made close to $18 million in revenue in 2023 and is expecting a significant growth in the coming years. This growth necessitated a new way to handle the cash flow issues which arise out of the specific nuances of SmarterTravel’s business model.

Customer’s needs

According to Sayanthan Bhowmick, the cash flow challenges of SmarterTravel arise out of their business model, which is typical for travel arrangement companies: when someone books a hotel room via SmarterTravel, the company gets the money for the customer, but the hotel room suppliers are only paid when the customers check out from their rooms.

Hence there is a lot of cash sitting on the bank accounts of SmarterTravel. As Sayanthan Bhowmick explains it, It's important for SmarterTravel to understand how much is the exact liability, so that the finance team can figure out how much is the rest of the cash that can be used for operational deployment. And because the company operates on a very thin cash buffer, it’s of paramount importance to really know the runway and decide then in which project the money should be invested in, and what’s the potential cash scenario for it.

When Sayanthan Bhowmick joined the company, he realised that there were wrong decisions made due to an unclear management of the cashflow. So he tried to get a grip of the cash flow by building primitive Excel models to forecast the cash flow, outlining the daily cash in and daily cash out. But soon, he found it wanting: “It's not really dynamic. It doesn't consider how my actuals are changing from the actual forecast and it cannot update the cash flow forecast based on the actuals.” Eventually, the VP of Finance got fed up with creating a new Excel for every new scenario and struggling to have a daily cash balance.

Solution

Sayantan Bhowmick startet to look for a cash flow management software and after many failed attempts and some companies even offering to build him something for an exorbitant price, he found Agicap. The software drastically changed his workload. While he used to spend six to eight hour a week on cash flow planning, now he his has to spend 10 to 15 minutes a day to check his cash balance situation. It has also become much easier to send custom reports to his CEO or to board members, if they request specific cash flow scenarios.

" The key benefit of the Agicap platform is you're going to have a full 360 degree transparency of your cash flow situation. You will have the clear understanding of how you're spending money, how you're making money and how long your runway is. It's very important for a startup like ours and it is going to enable you to make the right decision for your company. "

Sayantan Bhowmick

VP of Finance at SmarterTravel

The VP of Finance can now also benefit from Agicap’s integration of the daily transactions from the bank and QuickBooks. Agicap learns to spot specific transactions from the bank and precategorise them effectively, so that Sayanthan Bhowmick knows how much his company is paying for different line items or different segments.

" “I found Agicap can meet all of my expectations. In fact, it kind of exceeded all my expectations, really." "

Sayantan Bhowmick

VP of Finance at SmarterTravel

Conclusion

Now Sayanthan Bhowmick can focus his new spare time thanks to Agicap to improve other processes around financial transformation for SmarterTravel to grow in a healthy way.