Tips & Tricks for optimizing Forecasting & Working capital

| 30-06-2021 | Cashforce |

The economy is poised for a rebound due to pent-up household demand coupled with historically low inventories. Businesses need to start preparing for the surge in orders and ensure they can sufficiently manage working capital and continue to finance their operations in the most efficient way.

Automating key elements of the Order-to-Cash process will allow businesses to absorb this revenue growth with their existing resources, while generating greater sums of liquidity — ensuring they can stay on top of their cash conversion cycles without the need for expensive and risky borrowing.

Watch Rob Harvey from Sidetrade alongside Nicolas Christiaen, CEO & Co-founder of Cashforce.

A few key points discussed in this session:

  • The importance of thinking about the process first to understand your cash flow drivers and to define what you want to measure.
  • Key to automating your processes is to start small, land & expand.
  • Create synergies by effectively combining cash & working capital data.
  • Building the business case internally by calculating the different aspects that bring ROI.

Are you ready for the economy to bounce back?

Watch this session on-demand Here

 

Getting Granular: A Tool to dig deeper and Improve Cash Forecasts

03-02-2021 | Cashforce | treasuryXL |

Covid-19 shook the foundations of Cash Flow forecasting and Working Capital Management for companies facing uncertainty about revenues, vendor payments, appropriate inventory levels and adequate cash reserves.

  • At a recent NeuGroup virtual interactive session, one participant impressed others by describing how a Fintech solution provided by Cashforce a year earlier allowed his company to dig into the weeds of business operations, examining line-item details of cash flows to prepare for and absorb shocks to liquidity.
  • That ability helped treasury provide real value to the company when the internal spotlight landed on the team during the pandemic.

Digging into details: Cashforce opened a window to a more accurate cash picture by revealing what was going on across the business and how various moving ‘levers’ were rapidly changing, the treasurer said.

  • The technology tracked the granular details of cash flows and highlighted respective drivers that helped identify areas of business behaving normally and those under greater stress from delays in customer receipts.
  • The resulting insights facilitate setting baseline expectations and seeing potential roadblocks so that treasury teams can have productive conversations with operations teams about changes, new products, etc. so that business intelligence is layered into forecasts appropriately.

The velocity and veracity of data. Covid-19 has called more attention to the need for banking APIs and the harmonization of data feeds into a single analytical source. Real-time mandates are now the norm: Everyone wants payment information in real time, with consolidated cash positions at the press of a button. This greater level of urgency has driven the need for cash flow forensics and analytics.

  • 82% of participants polled have accelerated plans to automate and digitize treasury operations since the pandemic (see chart above for details).
  • Cashforce stressed that all processes surrounding cash flow and working capital optimization must be revisited to accomplish real-time goals. Across companies, they are seeing an emergence of a cash culture away from the heavy focus solely on earnings.

 

 

This shift requires links to AI models so treasury practitioners can determine cash flow drivers not easily spotted by the human eye because they are in the weeds of massive amounts of data.

The data is there; why can’t we get to it? Simply put by one member: Most treasury management systems (TMSs) are not designed to house the magnitude of transaction-level data nor provide the analytic capabilities needed for transparent cash forecasting and best-in-breed working capital analytics.

  • For example, not all TMSs are able to take in various data streams or extrapolate trends to build cash flow patterns into a cash forecast. For companies with multiple ERPs, the complexity and volume of data becomes exponentially difficult to manage and impossible to analyze manually.
  • Algorithms designed to roll up your sleeves for you and dig into transaction-level detail to predict trends and flag anomalies provide a structure for cash optimization and a safeguard for deviations that threaten liquidity.
  • Measure KPIs to move the needle. Automated calculations and daily reporting on key indicators through Cashforce tools allow for expedited metrics that enable smart decision making and facilitate improving working capital through analytics.

Wedded bliss: Marrying short-term direct to long-term indirect cash forecasts! Treasury and FP&A forecast disconnects are common sources of reconciliation tension across companies.

  • Cashforce uses a “rules engine” that takes ERP data to transform the indirect P&L components into direct cash flow drivers and calculate timing parameters based on historical trends.
  • One member inquired about the possibility of forecasting by purchase order and was pleased to hear that once the purchase order details were transferred into the system, algorithms calculate cash amounts and timing for both “open ended or closed” purchase orders, taking the headache out of what is often a guessing game.

 

 

 

Digital Treasury: Can it Tackle the Cash Forecasting Challenge?

01-05-2021 | Cashforce | treasuryXL |

Several decades ago, Excel was invented to process/model inputs and generate outputs. Today, it is still by far the most used technology to generate a cash flow forecast. However, as we strive to achieve better forecasting accuracy rates, our desire for automation and the seamless processing of FX hedges, liquidity borrowings and deposits have underlined the need for more effective modelling and increasingly powerful data processing.

The good news is that we’re at the forefront of that digital treasury revolution, or so-called ‘Treasury 4.0’. This means:

  • Leaving the manual-driven Excel jungle behind us and adopting an automated, data-driven forecasting process
  • Automating decision-making based on logic (rules that are within corporate policies), which will drive our liquidity and FX hedge usage

THE CASH FLOW FORECASTING CHALLENGE

Last year, multiple treasury surveys from sources including the Association for Financial Professionals, the UK Association of Corporate Treasurers, PwC and Citi, concluded that cash flow forecasting remains the primary challenge for treasurers today.

What are the headaches behind the process? Why is it so difficult for a corporate treasurer to generate an accurate cash flow forecast? And do we currently have the opportunity to solve this challenge?

The cash flow forecasting challenge consists of multiple underlying process complexities. The aim is to create an accurate cash flow forecast that helps us to make optimal FX and liquidity decisions.

What is accurate? You could write a book about cash forecast accuracy, since accuracy levels are totally different when comparing forecasts between different industries, time horizons, cash flow categories etc. When we forecast with a time horizon of five years, the accuracy levels are, of course, nowhere near as precise as when we forecast something just a few days in advance – and more reliable data is available. Depending on the goal, the treasurer will need a specific form of accuracy.

In addition, cash flow forecast data, together with the forecast assumptions/used models, need to come together in a well-coordinated process. Other challenges lie behind this process, including a disconnect between different data sources/systems such as enterprise resource planning (ERP) and treasury management systems.

Furthermore, there are myriad data-related issues to contend with including: concerns regarding data quality inside these multiple systems; the sheer volume of data to be processed; the need for granular and/or high-level data; and whether reliable external data can be found to be used to further improve the model.

Finally, aligning and coordinating forecasting assumptions between the different company departments is a time-consuming exercise. Imagine pulling all these assumptions from both HQ and local levels into an Excel model. No easy task.

 

FIG 1: THE CASH FLOW FORECASTING CHALLENGE

Fig 1: The cash flow forecasting challenge

SO, WHAT HAS CHANGED?

Solving the cash flow forecasting challenge is easier said than done. Nevertheless, today treasurers can leverage several available technologies that, if used together intelligently, can tackle the described challenges head-on.

First, when we think about the goals and the accuracy levels that treasurers want to achieve, we can use different models to calculate those, such as accuracy heatmaps. Second, when we consider the data (ERP and non-ERP) required to run these cash flow forecasts, we can rely on big data engines, advanced extract, transform and load (ETL) processes, and application programming interface- (API) and non-API-based connectors that create an easy data flow into forecasting models. We have ways to analyse data quality as never before and we can set up a reliable work flow process to obtain assumptions from the decentralised business units all the way up to HQ level. This generates a cash flow forecast while keeping the granular detail.

Third – and we are only scratching the surface here – several machine learning models and algorithms are now at our disposal. These can be used to build and optimise cash flow forecasting models, so we can indeed solve the forecasting challenge in a reliable way.

Finally, armed with the right tools, the salient question is: what can we actually do with the cash forecast? We call it Cash Flow Forecasting 3.0: automating the decisions that are based upon the cash forecast (investing excess liquidity, performing a particular hedge, etc.) or the so-called post-forecasting decision-making engine.

By combining technologies we can not only automate manual and repetitive tasks, but effectively integrate the systemic data with human expertise and algorithmic trends from historic data. Add to this the use of recommendation engines and intelligent insights, and the interplay of data inputs can generate enriched decision support. Apparent visualisations and scenario analyses can offer a clear view of actionable results that treasury and management can use in their decision process. Reliable technology that enables people to make high-caliber decisions; this, we believe, is the true power of digital.

 

 

About Cashforce        

Cashforce is a Cash Forecasting & Working Capital Analytics platform for corporates, focused on analytics, automation and integration. Cashforce connects the Treasury department with other finance / business departments by offering full transparency into its cash flow drivers, accurate & automated cash flow forecasting and treasury reporting. The platform is unique in its category because of the seamless integration with numerous ERPs & banking systems, the ability to drill down to transaction level details, and the intelligent AI-based simulation engine that enables multiple cash flow scenarios, forecasts & impact analysis.

 

Cashforce Webinar: Building a Resilient Supply Chain

| 05-10-2020 | Cashforce

We highlight the following event, held by our partner CashForce. Webinar: Building a Resilient Supply Chain

Over the last couple of months, many companies faced quite some disturbance value chain. During this session we unpack some of the trends and possible solutions towards building a resilient supply chain.

In this webinar, we will share how companies can define a new strategy to overcome this pressure on liquidity.

We are very proud to welcome the following speakers:
• Nicolas Christiaen, CEO & Co-founder at Cashforce
• Steven Lenaerts, Head of Product Management Global Channels at BNP Paribas
• Brian Shanahan, Founder of Working Capital consultancy Informita

Date, time and registration

Date: Tuesday, October 13th 2020

Start time: 1pm-2pm CEST

Register here

Cashforce is advancing cash forecasting innovation with the launch of its “Cashforce NextGen” platform

| 28-09-2020 | Cashforce | treasuryXL |

Cashforce has announced it is launching “Cashforce NextGen”, their new software platform, leveraging years of experience in delivering data-driven cash forecasting. With this new platform Cashforce wants to lower the barrier of entry for cash flow forecasting by introducing real-time data processing, a more intuitive user experience, enhanced scenario building capabilities and more AI-powered-algorithms. Cashforce NextGen will be launched in Q1 of 2021.

“Through years of experience in cash flow forecasting at organizations with various complexities, we’ve learned that the perfect solution should be able to adapt to the client’s maturity in order for them to scale their cash flow forecasting process at their own pace,” says Cashforce CEO Nicolas Christiaen. “Our NextGen platform will allow global & local users to start forecasting using an easy workflow and then perfect their process gradually using system integration capabilities, real-time data processing and smart alerting functionality. Simply said, Cashforce NextGen will deliver a swiss army knife for modern day cash forecasting.”

Current Cashforce users are also excited about the upcoming NextGen platform. “Thanks to Cashforce, we are able to analyze a lot more data at a higher quality than we had ever been able to before,” says James Kelly, Group Treasurer at Pearson. “Cashforce boosted our cash forecasting process with AI-powered algorithms and scenario-building capabilities generating significant savings in annual borrowing. With the NextGen platform, I’m most excited to use real-time data to improve the accuracy of our scenario models even further.”

The NextGen platform is being built in conjunction with clients and prospects (through an Early Adopter Program), top-tier treasury advisory firms and global cash management banks. The first rollout is scheduled for early 2021. Find more info on Cashforce NextGen and its launch!

 

About Cashforce        

Cashforce is a Cash Forecasting & Working Capital Analytics platform for corporates, focused on analytics, automation and integration. Cashforce connects the Treasury department with other finance / business departments by offering full transparency into its cash flow drivers, accurate & automated cash flow forecasting and treasury reporting. The platform is unique in its category because of the seamless integration with numerous ERPs & banking systems, the ability to drill down to transaction level details, and the intelligent AI-based simulation engine that enables multiple cash flow scenarios, forecasts & impact analysis.

 

Webinar recording: The Future of Cash Flow

| 11-08-2020 | Cashforce

Cash forecasting has been essential to treasurers over recent months both with respect to systems/behaviour/data.

In this webinar we discuss the future of cash flow, together with Caroline Stockmann (ACT), Ginny Wu (Walker Shop Footwear), Gerard Tuinenburg (Unilever), James Adams (Chalhoub) and Nicolas Christiaen (Cashforce).

Watch recording:

 

How to develop the ultimate Cash Flow Forecast

| 29-06-2020 | Cashforce

Cash flow forecasting has been called many things in literature. Ranging from the cornerstone of a finance & treasury department to the lifeblood of any organization; it’s fair to say cash forecasting is vital to get an accurate prediction of an organization’s health. Cash forecasting, at its core, is simply identifying all the various in & outflows over a given period in order to analyze and compare those estimations with your actuals. However, in reality, it’s not that simple and a lot of challenges arise in getting an acceptable end result, especially when complexity increases i.e. multiple systems, entities, currencies, etc. Additionally, it doesn’t stop at regularly getting the right information in a timely and efficient matter. Setting sensible assumptions and providing contingencies that offer flexibility in case of unexpected events are a few quintessential things to consider. Improving your forecasting results is more than relying on hard data, but bears fruit in the synergy of art and science. Don’t know where to start, or how to fill in the blanks on further optimizing your current process? Then follow this checklist.

1. Set your goals & requirements – getting to the why – decide:
  • Why are you creating a cash forecast?
  • Do you want to perform an indirect or a direct cash forecast e.g. focus on short term (direct) or longer-term (indirect), or a combination of both
  • What does successful (output look like? (formats, visuals…)
  • If you would like to combine both, choose how the reconciliation would work?
  • What level of granularity do you need?
  • What KPI’s will you be measuring?
  • Who will be the main users of the reports and analyses? (operational vs strategic or both)
  • Who will be contributing to generate the forecast?
  • How will the different contributors and users consume the outputs?
  • What other stakeholders will use the forecast? (e.g. shareholders)
  • Will you recognize forecasting performance? (e.g. remuneration)
  • What are your main cash flow drivers? (how do you define your business model?)
  • What will be the main process-steps?
  • To what extent your staff will be involved in the process? (vs. technology doing the work)
  • In case of exceptions, can the process be sidestepped? If so, what happens then?
  • What controls will be put in place?
  • Who will be in charge of setting up the process? (internal/external)
  • Who will be the main owner of the process?
  • How often does the data need to be updated?
  • How will data quality be ensured for new inputs?
  • What process will be put in place to clean the current data?
  • How will you flag and treat mis-allocated cash flows?
  • What will you use as a reporting currency?
  • How do you treat currency differences?
  • What data sources are most relevant for the forecast and what data you want to take into account:
    • Systems holding your (actual & future) payables and receivables?
    • What formats are your bank statements in? (MT940, BAI, EBICS, CODA…)?
    • Financial planning data. e.g. FP&A / budget / planning tools?
    • Do you have any Treasury & financing data, e.g. interest & FX payments on ongoing deals, residing in, e.g. a Treasury Management System or spreadsheets?
    • Do you need to take any other data into account, e.g. in data warehouses, other specialized systems for leasing, salaries, projects, etc.?
    • What manual input do you require? To what level?
  • How will you get the above data into the forecast? Is it possible to automate these processes?
  • How many forecast horizons do you want to define?
  • What cutoffs would you put in place to split the horizons?

How would you divide the short-mid- & long-term components of the forecast, see (e.g. different per data source below:)

An example of Cash forecasting horizons & their sources

  • What cash flow categories do you want to use?
  • Is there a template you can use as a basis of cash allocation categories, e.g. your current ERP, etc.?
  • How will you treat the unallocated transactions/cash flows?
  • Setting up accuracy feedback loops, e.g. regularly comparing actuals vs forecast & reviewing for improvement
  • Choosing which algorithms / logic – based on business drivers – can be integrated into your model to improve the forecast
  • Decide which contingencies to build in, e.g. revenue/cost/currency/… assumptions

Evaluate how you will you compare with and integrate industry best practices, e.g. staying up to date with the latest technology/peers/…

While creating an accurate cash forecast is not rocket science, getting an effective reporting process in place certainly requires a well thought out and reproduceable plan. Defining the who, the what, the when and the how is both a quantitative and qualitative exercise in building out a forecast. This checklist shows you how to combine the art and science of cash flow forecasting to get it done.

Cashforce Webinar: Quick Wins Offerings

| 13-05-2020 | Cashforce

CashForce invites you to learn about their Quick Wins Offerings during a webinar on Tuesday, May 19th at 5pm (CEST). 

In the context of the current environment, many companies are looking for ways to create visibility on Cash and Working Capital.

This is why we would like to introduce 3 Quick Wins Offerings to you:

  •  delivering a functional prototype within 30 days
  •  offered at a subscription period of only 3 months (with opt-out)

Date, time and registration

Date: May 19, 2020

Start time: 5.00 pm CEST

Register here

 

Download Leaflet 

Cashforce Webinar: How Treasury is dealing with the new normal

| 14-04-2020 | Cashforce

We highlight the following event, held by our partner CashForce  in collaboration with Citi; Webinar: How Treasury is dealing with the new normal

Only a short few weeks back Treasury professionals were operating in a relatively benign environment; managing routine funding needs, investments and supporting expected business growth.
Today, Treasury is in unchartered waters, working remotely, with a return to 2001 and 2008 levels of market uncertainty.
Join the panel of Corporate Treasury professionals (speakers to be announced) who are managing this business and market disruption at the frontline.
Together with Nicolas Christiaen (CEO – Cashforce), we’ll learn about their response and what steps could be taken now to prepare for the emerging new norm for Treasury.
Furthermore, Dr Duncan Cole (Principal – Citi Treasury Advisory Group) is joining this webinar.

Date, time and registration

Date: April 21st, 2020

Start time: 11am EDT / 5pm CET.

Register here

Cashforce: Treasury year-end meetup

| 04-01-2018 | Nicolas Christiaen | Cashforce | Sponsored content |

Onderstaand een kort verslag van ons Treasury year-end meetup-event van eind 2017. 

Tim (Jonk – Thomson Reuters) en Martijn (Duijnstee – Cashforce) trapten af met een (uiterst!) korte terugblik op 2017 want alle ogen waren eigenlijk al gericht op het progamma waarin de 3. Top-challenges 2018 voor corporate treasurers de revue zouden passeren.

Nicolas (Christiaen – Cashforce) gaf inzicht in wat er bij komt kijken om, in 6 stappen, een daadwerkelijk nauwkeurig en geautomatiseerd 1. Cash forecasting-proces in te richten. No more Excel!

Bart-Jan (Roelofsz – HERE Technologies) kwam letterlijk net uit ‘de vlieger’ uit Chicago stappen en kon gelijk door naar het podium waar hij een bijzonder aansprekende presentatie gaf over 2. Financing in het algemeen en de transitie van bedrijfsactiviteiten en opbouw van het Treasury en Finance Team in een snel groeiende organisatie. Top!

Alex (Goraieb – Thomson Reuters) nam het stokje over en gaf ons meer dan een kijkje in de wondere wereld van 3. Risk Management. Een wereldreis in de achtbaan van volatiele markten en valuta, via de onderliggende techniek van trading in grote posities naar een lesje ‘hoe selecteer ik de beste bank’. Well done!

En toen was het snel! naar de borrel want in het kader van ‘Act Global, drink Local’ stond het Ijndejaarsbier van Brouwerij ‘t Ij koud en op fust te wachten, en wat had iedereen toch een dorst gekregen…

Tijdens de borrel werden er meerdere robbertjes uitgevochten tijdens de Kick-off 2018 games op de Cashforce-voetbaltafel.

Voor hen die er waren, dank voor jullie komst en voor hen die er niet waren: volgend jaar een nieuwe kans want wat ons betreft zeker voor herhaling vatbaar!

 

Nicolas Christiaen

Managing Partner at Cashforce