Archery had its UK Sport grant cut from £4.4m to £3.1m ahead of the 2016 Rio Olympics after it failed to deliver a medal at London 2012.
But, with its grassroots programmes funded separately by Sport England grants, Williamson reckons Britain's archers can still target medals at future games.
The 2004 Athens bronze-medalist, whose London hopes were dashed when she crashed out in the second round, was expecting the decision to be made.
She said: "I think the cut had been anticipated, because we didn't get the results we hoped for in London.
"We have to be realistic and everyone has suffered and now it's limiting the resources in the pot, so we have to be selective on how we use the resources.
"It's up to the governing body how they spend the money and how it's targeted. But archery gets better grants from Sport England, which is used for grassroots.
"It might be that it will be hard to see what positive things are happening over the next four years in senior tournaments.
"For example, it might be that because of the increase in Sport England funding at grassroots level and a decrease at senior level.
"We might not see the impact in 2016, but we will see it in 2020, so we might miss a cycle and do better at the Olympics after Rio."
Archery had been braced for a funding cut after a disappointing London event.
But Williamson believes continued public funding is vital for sports like archery to prosper.
The 41-year-old said: "If we want to continue to do well, we have to invest in it.
"Everyone has got the feel-good factor from our home Olympics at the moment, but maybe people won't feel as enthusiastic when it's not in our own country.
"I have always felt particularly indebted to Lottery funding because it makes a difference."