No Room for Error: Cash Visibility & Forecasting for Distressed Middle Market PortCos

When a middle-market company is in financial distress, every dollar and every day counts. Cash truly becomes the lifeblood of the business – without sufficient cash on hand at the right time, even a fundamentally sound company can fail [1]. Unlike larger corporations with ample buffers, distressed middle-market firms (often portfolio companies of private equity distressed funds) operate with razor-thin margins for error. In these situations, finance teams and CFOs are under intense pressure to know exactly how much cash is available, where it’s held, and how long it will last. Unfortunately, achieving real-time cash visibility and accurate cash flow forecasts is easier said than done. Many mid-sized companies still struggle with fragmented banking relationships, manual processes, and unreliable forecasting methods. This blog will explore the key pain points that distressed middle-market companies face in managing cash, supported by data and survey insights, and discuss how they can be addressed. We’ll start with the problems and later introduce how tools like Pegasus can offer a solution.

The High Stakes of Cash Management in Distress

In a turnaround or restructuring scenario, liquidity is king. Companies in distress have zero room for surprises or delays when it comes to cash. Best practices in the restructuring world reflect this urgency: a rolling 13-week cash flow forecast is considered mandatory for any stressed or distressed company [2]. In fact, experts advise that management must be able to accurately forecast cash flows on a weekly (even daily) basis and report any deviations immediately – especially to lenders or investors providing lifeline financing [3]. The reason is simple: if you don’t foresee a cash shortfall coming, you can’t act in time to prevent disaster.

To put the stakes in perspective, consider this finding from a recent survey of over 500 CFOs: 37% of CFOs admitted their cash flow forecasts are unreliable, and 63% said they do not even maintain short-term (rolling) cash forecasts [4]. For a healthy company, an inaccurate forecast might lead to a missed opportunity; for a distressed company, it could mean missing payroll or violating a debt covenant. Unexpected cash crises happen far more often than most realize – mid-size businesses in one study faced an average of 14 unexpected cash shortfalls per year [5]. In a troubled company with limited reserves, any one of those 14 surprises could be the blow that breaks the business. Clearly, the margin for error is virtually nil, which is why getting visibility and forecasts right is so critical.

Fragmented Banking = Fragmented Visibility

One of the first challenges to emerge is simply knowing where all the cash is. Middle market companies often maintain accounts across multiple banks – a trend that’s been growing in recent years. In fact, half of mid-sized businesses work with three or more banks, and 68% are using more banking partners than they did 3–5 years ago [6]. This diversification might have its benefits, but it creates a fragmented treasury. Cash balances are spread over numerous bank portals and statements, each with its own login, format, and timing. Treasury and finance teams find themselves logging into multiple systems or waiting for reports just to piece together the company’s total cash position.

It’s no surprise, then, that 71% of finance decision-makers say getting a complete view of money movement across all their bank accounts is difficult [7]. If over two-thirds of companies (many not even in distress) struggle to see their consolidated cash in real time, imagine the challenge for a distressed portco that might have added accounts or new lenders in a hurry. Limited visibility means idle cash can hide in some corner of the organization while another corner scrambles to borrow money. One consequence of this siloed visibility is higher cost and waste – companies with poor cash visibility often resort to expensive last-minute financing. For example, an industry survey in the UK found that unreliable cash forecasts (often stemming from poor visibility) cost mid-size businesses an average of £660,000 per year in unnecessary fees and lost opportunities [8]. Those firms paid 91% more in overdraft fees than peers with reliable forecasts, because they failed to utilize cash on hand and had to borrow or overdraft unexpectedly [8]. U.S. companies fared no better – the same study estimates around $420,000 in annual potential interest income is missed by mid-market businesses due to suboptimal cash management and forecasting [8]. In a distressed scenario, such avoidable costs and missed income can be the difference between survival and insolvency.

Why is visibility so challenging? Beyond having multiple banks, data is often scattered across different systems. A mid-market treasury might need to gather balances and transactions from bank portals, ERP systems, spreadsheets maintained by different departments, and perhaps even login to subsidiary accounts. As a result, data resides in silos and there’s no single source of truth. The process to collect and reconcile this information is painfully manual – which brings us to the next major pain point.

Manual Processes & Spreadsheet Nightmares

Despite advances in fintech, many middle market finance teams still rely on Excel and manual effort for cash management. There’s a familiar scene in countless companies: an analyst (or CFO themselves) hunting through emails and banking websites, copying figures into a spreadsheet, and hoping the final tally is accurate. According to one report, 89% of treasurers say cash forecasting is their top concern, yet 83% admit that forecast inaccuracy is a major problem [9]. What’s driving this inaccuracy? A big factor is the prevalence of manual, spreadsheet-based forecasting. After gathering payables, receivables, and other data, “the treasurer then examines the information and creates forecasts in spreadsheets,” as one study describes – a process rife with potential for error [9].

Manually wrangling data is not just error-prone, it’s slow and resource-intensive. Treasury teams in mid-sized firms often find themselves “swamped with many spreadsheets” from different sources (CRM, ERP, sales systems, etc.)[10]. Merging all that data by hand is like trying to assemble a jigsaw puzzle under time pressure. It’s no wonder that forecast frequency suffers – some teams can only manage to update their cash forecast monthly or biweekly at best, because increasing the frequency would mean exponentially more work [11]. This lag is dangerous: infrequent updates mean you catch problems late. If you’re only checking cash forecasts once a month, a lot of nasty surprises can brew in between.

Spreadsheets also tend to be highly person-dependent. Often, “there’s only one person who really understands the model” used for cash forecasting [12]. That tribal knowledge risk is huge – if that key employee is out sick or leaves the company, the whole forecasting process can grind to a halt [12]. Moreover, consolidation is a nightmare when multiple entities or divisions are involved. One finance leader shared an example of a €300M revenue company with 30 subsidiaries worldwide: each sub sent its cash forecast in a spreadsheet every week, and the CFO’s team manually copy-pasted them into a master file [13]. Not only did this consume countless hours, but it also made meaningful analysis (like variance tracking or scenario testing) practically impossible.

All these manual workflows contribute directly to inaccurate forecasts – and as we noted, bad forecasts have real costs. Being off in your projections can lead to cash crunches or taking on debt unnecessarily [10]. In a distressed company, that might mean failing to pay critical vendors or breaching a loan covenant because you didn’t foresee how low the cash would dip. It’s telling that business complexity and outdated tools were identified as the top challenges in forecasting for middle-market firms [14]. The more complex the organization (many accounts, entities, currencies) and the more it relies on dated tools (Excel and email), the harder it is to get forecasts right. For instance, companies managing over 50 legal entities experienced an average 29% gap between forecasted and actual cash in one study [15]. That kind of variance could be fatal if a distressed company is expecting $5 million of liquidity and only $3.5 million materializes.

The Need for Accurate, Integrated Forecasts

Beyond day-to-day visibility, distressed businesses need robust forecasting that looks at short, medium, and long horizons in tandem. However, most companies are not there yet – a recent study revealed about 78% of UK CFOs (and 81% of US CFOs) do not integrate their long-term, medium-term, and short-term cash forecasts into one view [16]. In practice, this means the 13-week cash flow model might live separately from the annual budget or the 3-5 year plan. One set of numbers might be on a rolling weekly forecast spreadsheet, while another set lives in an FP&A system or budgeting tool – and they don’t reconcile until after a problem occurs. This disjointed approach can be dangerous. In fact, many CFOs “don’t see losses on a daily basis because they lack a short-term cash forecast, and by the time an issue shows up in the medium-term forecast, it’s already too late” [17]. In other words, if you’re only looking at quarterly or monthly projections, you might miss the fact that next week you’ll run out of cash – and by the time the quarterly view signals trouble, the crisis has already hit.

For a distressed company, integrated forecasting is vital for survival. Short-term forecasts (daily/weekly liquidity) ensure you can react immediately – for example, knowing today if next Tuesday’s payroll will overdraft the account gives you a chance to draw on a revolver or arrange a bridge loan now, not in panic on Monday night. Medium-term (13-week) forecasts are the bread-and-butter of restructuring planning; they allow management and stakeholders to project if the business can get through the next quarter and test assumptions like timing of receivables or asset sales. Long-term projections (1-2 years) help in evaluating restructuring plans or refinancing needs. All three need to reconcile with each other. If they don’t, blind spots emerge. As one treasury expert put it, not having a clear, integrated forecast means that if a major issue does arise, the company will likely be forced to use “onerous short-term financing options” to cover the gap [18] – precisely the kind of expensive, last-resort money that distressed firms want to avoid.

The goal for any finance team in a turnaround should be zero surprises. Attaining that means implementing a cash forecasting discipline that is continuous (frequently updated), granular (ideally down to daily receipts and disbursements), and connected (aligned with operational reality and longer-term plans). Achieving this manually is extremely challenging, but fortunately there are technologies and tools designed to help.

From Spreadsheets to Solutions: Building Cash Visibility and Confidence

Addressing the cash visibility and forecasting challenges requires a combination of process improvements and modern tools. On the process side, distressed companies do well to cultivate a “cash-first” culture – ensuring every department understands that cash tracking and forecasting is a top priority. For example, instituting daily cash huddles or strict weekly cash reporting from business units can instill discipline. Many successful turnarounds involve creating a 13-week rolling cash flow model* that is updated and reviewed every single week without fail [2]. This practice forces everyone to stay on top of inflows, outflows, and variances. It also helps catch issues early – if a certain customer’s payment is delayed or a cost runs over budget, it will reflect in the weekly update and management can act immediately (e.g. expediting collections or cutting a discretionary expense).

However, process changes alone can only go so far when teams are stuck with siloed systems and Excel. This is where technology steps in. Modern Treasury Management Systems (TMS) and specialized cash forecasting software can radically streamline the work. A good system will automatically consolidate bank balances from all accounts, integrate with ERP or accounting software for A/R and A/P data, and even incorporate invoices, payroll, and other upcoming cash flows into a forecast. By automating data aggregation, you can move from spending hours (or days) gathering data to actually analyzing data. Automation also reduces manual errors – when transactions flow directly from bank feeds and accounting ledgers into a central cash database, there’s less risk of someone copying a number incorrectly or overlooking a file.

Another benefit of modern tools is real-time alerting. Instead of waiting for an end-of-week reconciliation, many platforms can notify you if, say, today’s morning balance is lower than expected or if a large payment just hit. That immediacy is invaluable when every dollar counts.

Introducing Pegasus: Cash Visibility and Forecasting Reimagined

One example of a next-generation solution built for these exact challenges is Pegasus – a cash and liquidity platform designed specifically for middle-market finance teams (with an emphasis on private-equity backed and distressed environments) [19]. Pegasus was created to help firms move from static spreadsheets to dynamic, real-time financial decision-making. What does that mean in practice? In short: deep visibility, automation, and actionable insights.

• All Your Cash in One Place: Pegasus provides deep visibility into your cash conversion cycle and cash positions across the business [20]. It connects to your bank accounts and operational systems, aggregating balances and transactions so that at any moment, you can see a consolidated cash view. Instead of juggling three bank portals and guessing at today’s cash, the CFO dashboard in Pegasus shows exactly how much cash is available group-wide, and where it’s located, in real time. This directly tackles the multi-bank visibility problem – no more 71% of data stuck in silos or delayed views[7], because the information flows into one centralized platform.
• Automated 13-Week Forecasting: Pegasus was built with the 13-week cash flow forecast in mind. The platform lets you simplify your 13-week cash forecasting while increasing accuracy with a flexible forecasting tool [21]. It automatically pulls in data on accounts receivable, accounts payable, and other expected cash flows, and can update your forecast as new actuals come in. This means your team can maintain that crucial rolling forecast without the heavy lifting of manual Excel work. With Pegasus, finance teams gain the data and automation needed to take control of liquidity and eliminate manual spreadsheet workflows [22]. In other words, the software does the number-crunching, and your team can focus on analysis and decision-making.
• Variance Analysis & Reporting: Because Pegasus centralizes both the forecast and actual cash activity, it can quickly highlight variances – the moment something doesn’t go to plan, you’ll see it. For distressed companies reporting to banks or investors frequently, Pegasus makes it easier to manage covenants and borrowing base calculations by always having an up-to-date view of cash versus plan [23]. Instead of scrambling to compile data for a weekly cash call or lender update, the data is readily available and even visualized in dashboards. This consultative capability is key in a turnaround; you’re not just collecting data, you’re interpreting it with confidence.
• Insights to Optimize Cash: Beyond just tracking, Pegasus adds a layer of intelligence. It includes intuitive A/R and A/P dashboards to highlight bottlenecks – for instance, which customers’ late payments are dragging down your cash, or which vendors could be paid slower or consolidated for better terms [24]. These insights can help a distressed company squeeze extra liquidity from working capital (essentially finding cash internally). The platform can also identify idle cash or excess balances that could be swept to reduce debt or interest expense [25]. In short, Pegasus not only shows you the cash position, but also clues you into ways to improve it – a critical advantage when you’re trying to stretch every dollar.

Crucially, Pegasus is built for speed and ease-of-use. Distressed situations are fast-moving; management doesn’t have time for a six-month software implementation or a complex legacy system that requires a full-time administrator. Unlike some traditional treasury or FP&A systems that are geared for Fortune 500 companies, Pegasus focuses on the middle market and prides itself on being lightweight yet powerful [22]. The interface is user-friendly for a small finance team, and deployment can be done quickly (often a key consideration when a fund parachutes into a troubled portco and needs new tools immediately). By being SOC 2 compliant and cloud-based, it also meets security and reliability needs out-of-the-box [26].

Conclusion: From Survival to Stability

For distressed middle-market companies, strengthening cash visibility and forecasting isn’t just a finance initiative – it’s a survival strategy. Starting with basic disciplines like a mandatory 13-week forecast and strict daily cash monitoring is step one. But to truly stay ahead of the curve (and out of crisis mode), leveraging technology like Pegasus can make a world of difference. When you replace cumbersome spreadsheets and disjointed processes with real-time dashboards, automated forecasts, and data-driven insights, you give your team the gift of time and accuracy. Rather than reacting to the last fire drill, the finance team can proactively steer the company’s liquidity, anticipate issues, and make informed decisions in partnership with stakeholders.

The data points we’ve discussed paint a clear picture: lack of visibility and poor forecasting are pervasive problems, even in healthy companies. In a distressed scenario, those problems are magnified – but they are also addressable. By investing in cash visibility and forecast accuracy, distressed companies can buy themselves the most precious commodity of all: time. Time to execute a turnaround plan, time to negotiate with creditors, time to improve operations.

In summary, the journey from distress to stability hinges on never being blindsided by cash flow surprises. With the right processes and tools in place, finance leaders of middle-market firms can finally go from constantly putting out liquidity fires to confidently planning the path forward. No more guesswork, no more “flying blind” – cash clarity is achievable, and for distressed portfolios, it’s nothing short of a lifeline.

Sources: Recent surveys and expert insights underscore the challenges and solutions discussed here, including findings from HighRadius on mid-market treasury priorities[9][10], Agicap’s 2024 mid-market CFO study reported in TMI[27][8][28], the Modern Treasury State of Payments survey[7], and turnaround best practices from restructuring advisors[2][3]. These data-driven perspectives, alongside Pegasus’s platform capabilities[20][22], all point toward the same conclusion: enhanced cash visibility and forecasting accuracy are critical success factors for today’s distressed mid-market companies.

[1] [2] [3] Restructuring Troubled Companies

https://clearridgecapital.com/articles/6-areas-of-focus-for-troubled-companies/

[4] [5] [8] [12] [13] [14] [15] [16] [17] [18] [27] [28] The £660,000 Question: Is Your Cash Flow Forecast Failing You? | Treasury Management International

https://treasury-management.com/blog/the-660000-question-is-your-cash-flow-forecast-failing-you

[6] Winning the Mid-Market: How Banks Can Achieve Primacy in 2025 | Codat

https://codat.io/blog/winmidmarket/

[7] 9 in 10 Companies Struggle with Payment Operations Even as Instant Economy Demands Greater Efficiency, Modern Treasury Survey Finds

https://www.moderntreasury.com/newsroom/press-releases/9-in-10-companies-struggle-with-payment-operations

[9] [10] [11] 9 cash forecasting issues affecting midmarket | HighRadius

https://www.highradius.com/resources/ebooks/how-low-cash-forecasting-accuracy-affects-midmarket/

[19] [20] [22] [23] [24] [25] Cash and Liquidity Platform for Middle Market Teams – Pegasus Insights

https://pegasusinsights.com/pegasus-insights-cash-liquidity-platform-launch/

[21] FP&A Software for the Middle Market – Pegasus Insights

https://pegasusinsights.com/product/

[26] Pegasus Insights Selected to Present at Treasury Tank Innovation …

https://finance.yahoo.com/news/pegasus-insights-selected-present-treasury-171100499.html