#9 Not Searching For Alternatives

14-10-2021 | treasuryXL | Xe

This is the last part of XE’s ‘9 Mistakes Your Business Should Avoid’ journey. We have reflected upon Currency risk mistakes that companies worldwide often make. It is important to learn from these mistakes in order to avoid them. The message of this manual is that paying attention to foreign currency can deliver benefits ranging from increased value to better Risk management. To reap the benefits, it is important to work with a currency provider who understands what you need and who can help you achieve your goals. It is possible that your current currency provider can provide that, but if you don’t look around you won’t know if it might be better.

“Aandacht besteden aan vreemde valuta kan veel voordelen opleveren, variërend van meer waarde tot beter risicobeheer.”

Niet rondkijken naar alternatieve valutaservices is dan ook een enorme fout. Het is mogelijk dat u daardoor betere koersen misloopt, geen gebruik kunt maken van diensten waarvan u het bestaan niet kende en valuta niet strategisch kunt benaderen zoals zou moeten als praktijk en beleid een afspiegeling zouden moeten zijn van uw handelsomgeving. Ga er niet van uit dat de diensten die uw bank verleent, van het niveau en de kwaliteit
zijn die u nodig hebt. Het is gemakkelijk om bij uw bank te blijven en de zekerheid te hebben van een vertrouwde provider. Maar uw bank kan wellicht niet dezelfde verscheidenheid aan valutadiensten bieden als een gespecialiseerde provider die alleen vreemde valuta doet. Dat wil niet zeggen dat u de hype van concurrerende providers moet volgen. Als bijvoorbeeld een koers te goed klinkt om waar te zijn, dan is dat ook vrijwel zeker het geval. Wees ook sceptisch als providers u aanmoedigen om te gaan speculeren op valutamarkten of u ervan proberen te overtuigen dat ze koersschommelingen kunnen voorspellen.

Het klinkt misschien tegenstrijdig, maar de beste hedgepositie is degene die geen voordeel oplevert: een verzekering die u afsluit voor het ergste geval, terwijl u hoopt op het beste, namelijk dat de valutamarkten niet in uw nadeel bewegen. In werkelijkheid biedt zelfs een geslaagde hedge slechts wat meer tijd. Wat u nodig hebt, is een provider die de tijd neemt om erachter te komen wat de specifieke eisen van uw bedrijf zijn in plaats van een standaardservice te bieden. Competitieve koersen spelen natuurlijk een rol bij uw zoektocht, maar moeten zeker niet uw enige overweging zijn. U hebt een provider nodig die een oplossing op maat kan ontwikkelen die aan al uw eisen voldoet en u kan helpen om uw toekomstige risico effectiever te beheren. Neem met minder geen genoegen.

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A 360 Degree View On Security

| 13-10-2021 | treasuryXL | Nomentia |

One would think data protection and security measures are baked into our identity as digital people, especially in a year where we are working remote more than ever. But is it though? The breaches show that security is too often seen as something to kind of ‘wing it’. And there is an eternal question whether the best way to a secure IT environment is to educate the employees to make the right decisions or to put measures into place.

We personally believe that security and combatting Fraud is a combination of people, processes, and tools. Security literacy is a skill everyone should have and constantly develop, and companies can further support this by making use of tools such as multi-factor authentication to mitigate risks and implementing processes to keep their corporate environments safe. We think security deserves a 360 degrees view in an organization that is implemented throughout their solution landscape.

Login & User access control

This is a simple thing organisations can implement either with Single-Sign-On and/or multi-factor authentication. Multi-factor authentication (MFA) is a method of authentication that requires the use of more than one verification method and adds a critical second layer of security to user logins. A user is only granted access after successfully passing all authentication phases. The different factors are based off of different things as opposed to a simple password which bears some vulnerability. The first authentication phase is based on knowledge. A person needs to know their username and password, and this can also be initiated through single sign on with corporate credentials for a further security increase. The second authentication phase is based on possession. A person must possess and have access to a mobile phone to for example receive a code per text message or a phone call to double authenticate the log-in.

In practice this means, even if a username and password get compromised, cyber criminals will still not be able to login to the account protected with multi-factor authentication. And neither does a stolen mobile phone as both phases are required for a successful login.

One of the potential downsides to multi-factor authentication is that it adds one extra step in the process. And I can admit myself, every time I am going through the process of logging into our internal tools, we are sometimes a bit impatient while waiting for the text message. But it’s a small trade-off for security. Especially since single-sign on also adds convenience.

Single sign on means that people can log into systems with their corporate credentials and just speed up the process on that end. It’s fast and adds an additional security layer which is extremely powerful if paired with MFA.

Integrations

This is a crucial part in terms of security. We believe that monolithic enterprise platforms are dead and best-of-breed solutions that are highly integrated are the future. This best-of breed approach however also ads emphasis on the need to ensure the integrations are safe. Which data is travelling via which channels from where to where? How is the data in transit being secured from theft and man-in-the-middle attacks?

The first step is to map out all needed integrations and systems and create a use case scenario and based on this define the needed setup. For instance, in the context of cash management you might for instance end up protecting payment information with a higher security standards than a simple accounts payable extract that is used to cash forecasting only. The key is to have a companywide and regularly maintained risk analysis process that recognizes risky areas, measures the levels of set controls (preferably audited by external experts) and constantly comes up with better and better controls.

User access control

Understanding and carefully designing which user has access to which data and processes is not bullying your employees but is a crucial step in setting processes in place that further support security. In our case, our customers need to answer questions such as: which user can approve payments, who can add a new account number to the system, who can manipulate user rights, who can make a manual payment, or who can view balance information from banks and the likes.

Infrastructure and Platforms

Making sure that you run your IT infrastructure and solutions on secure platforms is a crucial control point. One would think that in this day and age that shouldn’t be a question anymore, yet we would recommend checking this anyway. How is the user access to databases and servers or other backend artifacts controlled? Are your administrators using multi-factor authentication? Have you segregated the so-called privileged access and user accounts? Do you keep a list of such accounts? Do you collect logs from your systems and store them securely?

Many industry standards come handy here. For us relevant standards are for instance ISO 27001 and ISAE 3402 auditing framework. In our domain particularly relevant is SWIFT Customer Security Program (CSP) which is a security framework developed and derived for financial industry from such international standards such as NIST and PCI DSS. All these standards should not be considered just as acronyms but a toolbox that can help you to build a company culture that takes security seriously in every step and by every employee in every role.

Security comes from within

Above are the steps that each organization can take to ensure that their set-up is secure. Let’s face it, there is no such thing as absolute security. But by establishing a strong security culture in your organization we believe you can make it really hard for criminals to gain access to our systems.

If you want to reach have an assessment of your security measures in terms of people, processes and tools for your cash management, please get in touch with us and we will assess your set-up and provide you options how you can further tighten your security. Cash is king, but hopefully a well-protected king.

CONTACT US 

 

 

 

 

No More Excuses! It’s Time to Implement the Right Hedging Program

11-10-2021 | treasuryXL | Kantox

More than half the participants of the Kantox & TMI FX Survey describe their existing currency hedging program as inadequate. And that’s not all: 72% of participants admit the need for updates and changes to their policies and programs going forward.

WEBINAR ALERT | How to achieve cash forecasting excellence – challenges and strategies

treasuryXL | Nomentia |

 

Date & time: October 20, 2021 at 3.00 pm CET | Duration 45 minutes

Cash forecasting remains one of the most challenging topics in treasury management. With the knowledge and years of experience of our experts within TreasuryXL and Nomentia, we will discuss cash forecasting in more depth. We’ll tackle the challenges that are paired with cash forecasting, and strategies to overcome challenges to achieve cash forecasting excellence.

Join the webinar to learn more about: 

  • Brief introduction to TreasuryXL and Nomentia
  • Short introduction to cash forecasting
  • Why many companies have sub-optimal cash forecasting
  • The challenges with cash forecasting
  • Managing the cash forecasting process
  • Steps to create cash forecast excellence

Click on the banner for registration.

Meet the speakers

Francois de Witte (1)

François de Witte

Seasoned Treasury Expert
TreasuryXL

Huub Wevers

Huub Wevers

Senior Sales Manager
Nomentia

Jouni Kirjola

Jouni Kirjola

Head of Solutions and Presales
Nomentia


 

 

5 Tips for Currency Exchange

07-10-2021| treasuryXL | XE |

If you’ve ever travelled abroad, sent a money transfer to family overseas, or made international business payments, you know it can be a pain to exchange currency. Searching banks, online exchange providers, or the streets of an unknown city for the best rates can be time-consuming and costly. And, if you don’t pay attention, foreign exchange costs can add up.

Here are five tips to help you save on currency exchange.

1. Plan Ahead

Find out what the current mid-market exchange rate is with our XE Currency Converter or XE Currency App. Next, compare the rates and fees offered by banks, exchange cambios, and online providers. Once you find the best deal, exchange your funds.

2. Understand Foreign Exchange Costs

Some foreign exchange costs can be transparent and others can be hidden, so it is important to understand what you are paying for. Just like every other company, foreign exchange providers need to make a profit to stay in business. The following are three ways in which providers make money:

  • Currency providers may charge a commission, flat fee, handling fee, or minimum charge
  • They may include a spread in exchange rates by buying currencies at one rate and selling them at another – with a margin included
  • FX providers may also charge transfer fees for wire transfers and other delivery methods

You can calculate your currency exchange costs with our XE Foreign Exchange Charges Calculator. Or, download the XE Currency app for iPhone and use our Rate Advisor to compare your provider’s price to the mid-market rate.

3. Consolidate your Transactions

Since every currency exchange transaction has associated costs, fewer transactions can sometimes result in lower costs. Depending on the type of transaction, you may save money by consolidating several money transfers into one large transaction. Some foreign exchange providers may even offer better rates, or waive commission fees for currency exchanges over a certain amount.

4. Beware of Counterfeits

Every country has its fair share of counterfeit currency – some more than others. To avoid fakes, try to become familiar with the look and feel of the currency. Take note of watermarks and other security features. This can make spotting a fake easier, although it probably won’t be possible to spot a high-level counterfeit. Try to use trusted foreign exchange providers and established currency exchange companies.

5. Bank Overseas for Extended Stays

If you’re moving abroad, studying internationally, or plan to stay in a foreign country for a long period of time, consider sending money and banking overseas. Opening up a local bank account can minimize fees and help keep your money secure. It also makes consolidating your currency transactions much easier and helps mitigate the risk of currency fluctuations.

 


Licence crowdfunding platforms (Dutch Item)

06-10-2021 | treasuryXL | Enigma Consulting |

De nieuwe Europese wetgeving voor crowdfundingdienstverleners treedt op 10 november 2021 in werking. Vanaf deze datum kunnen crowdfundingdienstverleners een vergunning aanvragen bij de Autoriteit Financiële Markten (AFM). Zonder deze vergunning kan de dienstverlening vanaf november 2022 niet worden voortgezet.



Vanaf 1 november 2021 kunnen aanbieders via een digitaal portaal van de AFM een aanvraag indienen voor een crowdfundingvergunning. De AFM gaat vergunningen verlenen voor zogeheten loan-based en equity-based crowdfundplatformen.

Enigma Consulting heeft ruime ervaring met vergunningaanvraag trajecten. Zo hebben wij onder andere betaaldienstverleners, cryptodienstverleners, elektronische geldinstellingen, aanbieders van online kansspelen en crowdfundingdienstverleners geholpen bij het verkrijgen van een vergunning of ontheffing.

Momenteel zijn de vergunningsvereisten die voor de omschreven aanbieders van crowdfundingdiensten gaan gelden nog niet volledig uitgewerkt door de Europese toezichthouder en de AFM. Wel zijn op basis van de gepubliceerde verordening de geldende voorwaarden en vereisten op hoofdlijnen al duidelijk.

Hierbij kunt u onder andere denken aan:

  • Het opzetten van een beheerste governance structuur en organisatie inrichting
  • Procedures en processen om de organisatorische en operationele vereisten om een beheerste en prudente bedrijfsuitvoering te waarborgen, waaronder o.a.:
    • Een scheiding van verantwoordelijkheden binnen de onderneming;
    • Het waarborgen van de bedrijfscontinuïteit;
    • Het voorkomen van belangenconflicten.
  • Het garanderen van een integere organisatie waarin de klantbehoefte centraal staat
  • Het opstellen van processen om klanten te identificeren, te monitoren en indien nodig, te rapporteren

Enigma Consulting heeft uitgebreide kennis en ervaring met het inrichten en vastleggen van een gedegen en compliant bedrijfsvoering.

Partner Interview | CEO Nicolas Christiaen about how and why they built Cashforce NextGen, the ‘next generation’

05-10-2021 | treasuryXL | Cashforce

 

Why did Cashforce create the ‘NextGen’? What’s the vision behind this great concept? We have asked CEO Nicolas Christiaen 10 questions regarding the creation of the NextGen platform.

Find out why Cashforce created NextGen, what makes it unique and what solution the platform offers to treasurers.

Introduction Nicolas

Nicolas Christiaen is the CEO and Co-founder of Cashforce, an industry leading cash forecasting and working capital insights system. Nicolas has an extensive background in finance analytics, cash management and cash forecasting. He has led the effort to bring Cashforce to multi-national firms in distribution/retail, manufacturing and logistics/services industries. Nicolas uses his experience to drive both product development and thought leadership within Cashforce, resulting in a user base that benefits, not only from the system, but also the best practices that helped design it. Prior to Cashforce Nicolas worked as a management consultant at PwC and was a serial entrepreneur, founding two other software companies. He is frequently a guest speaker in the FinTech community and you will often find him on panels at international treasury conferences.

 

Introduction NextGen

Cashforce is a “next generation” cash forecasting and working capital analytics solution focused on automation and integration. By using Cashforce’s cloud-based Software-as-a-Service (SaaS) platform, corporates can unlock the potential for their data to help make smarter decisions, saving time and money in the process. Cashforce can consume a large variety of data, process that data using machine learning and get insights into cash flows and working capital. Cashforce NextGen eliminates the manual and cumbersome treasury tasks around cash forecasting, enabling its users to take advantage of AI-powered scenarios and a strong workflow for distributed treasury teams. The Cashforce system serves mid-to-large-sized corporates and is currently being used at over 70 companies and as many countries.

INTERVIEW

1. Can you remember your “A-ha!” moment that made you realize Cashforce NextGen needed to be built?

Yes, I can remember it well. We were working on a proof-of-concept exercise with a huge dataset, imagining ways to manage this large amount of complex data. We have always tried to challenge ourselves to look for ways to do things better. Our technical team of UX and system performance specialists began laying out the case to use the latest technology to provide, not only the functionality, but also the scalability and performance we would need to meet projected commitments and fulfill the product vision. The team did a fantastic job and really showed me the “art of the possible”. That did it for me and we immediately switched gears to figure out how we could make this happen.

2. What critical issue does the Cashforce NextGen immediately resolve for the treasurer?

Right now, treasurers struggle to provide their stakeholders with accurate forecasts. This is due to the difficulty of consolidating data into one place, and dealing with complexities like intercompany payments, various payment behaviors and overdues. Treasury practitioners want to be able to drill into the data and to use the output to make important decisions from “how much excess cash do I have to invest for the short term?” to “how much cash will we have in three months when our planned acquisition closes”? It is hard to do that when your forecast is sub-par. Cashforce helps you pull data from every location where it resides so you can start with a complete picture. Then we layer our analytics on top of that, so that you have a clear picture of what is coming in and going out. The result is that the forecasted cash positions become meaningful enough that you can incorporate them into strategic plans.

3. How does the new platform differentiate from the other players in the market?

Cashforce began its journey from a working capital analysis point-of-view and we built our cash forecasting capabilities on top of that by linking to ERP systems. This had the effect of enriching the quality of the forecasts that we could generate and made them more useful. The ERP connectors themselves are a large differentiator: they ensure a seamless flow of granular, system-based data. This creates a fully transparent view into cash. On top of that, Cashforce applies smart forecasting logic (including AI-based algorithms, P&L-to-Cash logic, payment behavior analysis…) to build highly accurate and automated forecasts for the short, mid & long term. An intelligent simulation engine allows the Treasury department to evaluate different scenarios, analyze their impact and calculate the forecast/actuals variance.

4. Can each ERP system work with the Cashforce NextGen also when you work with multiple ERP’s located in different countries?

Yes, we have many clients that use Cashforce to pull in data from multiple ERP’s. Sometimes it is different instances of the same ERP, and sometimes it is a different ERP altogether. Either way, we configure Cashforce to pull in the needed data automatically, so that the end-users can start using the system with the data already loaded.

5. What is the biggest challenge you experienced while creating this new platform?

When you are trying to build a really remarkable product, there is always a tension between the ideal vision, the dream state, and what development can realistically deliver to meet market and client expectations and keep our overall momentum. On top of that, the pandemic struck while we were in the middle of our efforts, and this put an enormous strain on our timelines, productivity and ability to collaborate in real-time in the way you need to make something special. Doing that through web meetings can slow things down quite a bit, but luckily we already had a solid plan, an established process and an effective line of communication. This enabled us to keep going and now that we are moving back to normal, we are positioned to get out there and show what NextGen can do.

6. What is, in your perception, the biggest benefit of working with Cashforce NextGen?

As we brought Cashforce NextGen to market, we found that several benefits jumped out to our clients: Time-savings, Money-savings and the ability to use knowledge of your current and future cash positions to elevate forecasting to a strategic level. Many of our clients need to actively manage cash to invest or borrow properly, as needed and to make acquisitions. But they are using old tools and forecasting modules that simply didn’t give them what they needed. With NextGen, we have the highest degree of automation, the best workflow, the latest AI and machine learning models to improve forecasting and it all sits in a great user interface that is so easy to use. Sorry to not say one benefit, but the truth is the benefits are many.

7. What is the overall feeling of your customers about NextGen?

Our customers are very excited about the new product, just as we are. Prior to development, we made sure to meet with our clients, share the vision and gather their feedback, especially pain points. It was a great feeling when we went back to them to show our first demonstration of NextGen, you could feel the excitement in the air.

8. Can you give us an outlook on the product developments and tell us a bit more about your vision?

Cashforce’s vision has always been to save time and money for finance and treasury departments. Over the years, we have accumulated expertise around different approaches to short- mid-and long-term forecasting, connectivity with different ERP’s and TMS’s, designing sustainable workflows and integrating technologies such as artificial intelligence and machine learning. We want to leverage this knowledge alongside future-facing technologies, such as APIs, to create a new platform that is state-of-the-art and capable of consuming billions of transactions in real-time. However, we don’t plan to stop at consolidation and analysis of the data. We are working with our clients to build out the system to take the “next action”in their treasury processes. By linking with trade execution platforms and Treasury Management Systems (TMS), Cashforce will be a decision-making engine that drives our customers’ workflows.

9. The world is always changing, how does Cashforce stay one step ahead of its competitors?

The treasury world is always changing and will always be changing. It’s up to us to change with it and keep up with shifting consumer needs. Companies that focus on the past tend to stay in the past. So you must know what technology is out there, what is possible, what is available, what works and what doesn’t. For example, AI and machine learning will become ubiquitous and woven into the fabric of finance and treasury. That is why we want to lead the charge to use new methods and new technology. The better informed our clients are, the better prepared they will be to handle these changes as they happen.

10. Looking back on your Cashforce career, what is ‘the thing’ you are most proud of?

I have had the opportunity to work with some very talented people at Cashforce. I am most proud of our ability to create an environment that empowers our people to be as successful as they can. To see these talented people bring Cashforce NextGen to life has been an amazing experience.

 

 

 

Refinitiv case study | How Mercuria manages risk across assets with a single platform

04-10-2021 | treasuryXL | Refinitiv |

Mercuria is a global energy and commodity group, operating in more than 50 countries with over 1,000 employees and offices worldwide. Read more about why Refinitiv Eikon was selected to fulfill the complex cross-asset requirements from pre-trade, trade, through to post-trade and credit screening.

Mercuria’s business lines cover a diverse range of commodities trading as well as large-scale infrastructure assets. For that reason, they searched for a cross-asset platform to manage credit, pre-trade, trade and post-trade  to quickly, efficiently and accurately access global market insights, trusted market data and ‘best-of-breed’ industry analytics to help price-up derivative products.

Refinitiv Eikon platform was selected to fulfil the complex cross asset requirements from pre-trade, trade, through to post-trade and credit screening.

 

 

#8 Working with a Currency Provider that uses Rigid Procedures

30-09-2021| treasuryXL | XE |

A common problem for companies looking to manage Currency Risk effectively and want to carry out transactions as cheaply as possible, is that the terms of their currency provider are not flexible enough. This can especially be a problem for companies for which a hedging strategy is suitable but who are put off by the need to pay upfront or a margin for their forward positions. Some currency providers may in such situations offer more flexible credit terms than others.

Zonder die flexibiliteit is een hedgingstrategie voor sommige bedrijven niet haalbaar, zelfs als het valutarisico van het bedrijf aanzienlijk verminderd zou kunnen worden door de implementatie van zo’n strategie. In andere gevallen kunnen bedrijven wel hedgingposities nemen, maar niet onder de voorwaarden die het best bij hun individuele omstandigheden passen. Denk ook aan andere vormen van flexibiliteit. Biedt uw valutaprovider bijvoorbeeld toegang tot verschillende soorten betaalservices? Dat kan van belang zijn als u snel betalingen wilt doen aan verschillende partijen in verschillende markten en tegelijk zo veel mogelijk tijd wilt hebben om de transactie te voltooien. Zoek een provider die zijn service kan afstemmen op uw specifieke eisen en wensen. Uiteindelijk gaat het erom uw bedrijf zo veel mogelijk speelruimte te geven. Of het nu gaat om de dagelijkse transacties of het beheren van het langetermijnrisico, de manier waarop u vreemde valuta benadert, moet worden bepaald door zakelijke eisen en niet door de beperkingen en rigiditeit van uw valutaprovider. Bespreek met verschillende providers wat zij u kunnen bieden.

Klik hier voor meer Info en Download WhitePaper



Why You Should Say Goodbye To Spreadsheets

| 29-09-2021 | treasuryXL | Nomentia |

A recent Cash management survey that we did showed that 43 percent of respondents continue to experience issues with their Cash flow forecasting. Unsurprisingly, more than half of the market still use spreadsheets to execute this business-critical function. The million-dollar question is, why?

According to the European Spreadsheet Risks Interest Group, the reliability of a spreadsheet is essentially the accuracy of the data that it produces and is compromised by the errors found in approximately 94% of spreadsheets.

If accurate cash flow forecasting remains one of the key priorities for treasury and finance professionals alike and the market has easy access to affordable, cutting edge forecasting applications, why do we continue to rely on outdated, ineffective forecasting tools?

Common myths prevail that spreadsheets save money, are easy to use & flexible. In the spreadsheet’s defence, it’s a nifty tool, that ticks many of the aforementioned boxes and can work very well with cash forecasting solutions. But, for a growing business looking to mitigate risk and plan for the future, risks run high if you’re relying on a system that’s almost surely flawed, demands hours of manual input effort, prone to human error, exists largely undocumented and which no one really knows how it works.

“After the clever intern, who developed the nifty macros and formulas is no longer around……nobody knows how the application generates the numbers.”

Penny wise, pound foolish 

Spreadsheeting is, by and large, the manual process of gathering, inputting and administrating data. Typically, spreadsheets have been built up and added to over a period of years, becoming cumbersome to manage and share. In an eye-watering number of cases, the person originally responsible for constructing the spreadsheet has long since left the department. No one knows the algorithm behind the macros and no one assumes responsibility for its maintenance, let alone documenting changes and adaptations. The whispered precedent remains, “if it’s not broken, then leave it alone”……… Ouch!

Alternatives are perceived to be more expensive. Excel, for example, is cheap to acquire whilst Treasury Management Systems are expensive with lots of added features that SME’s in particular, don’t require.

Busting the myths

Cost is no longer a plausible reason to rely on spreadsheets for cash flow forecasting. Cloud-based solutions such as Nomentia Cash Forecasting, offer competitive pricing. Modular, on-demand, SaaS solutions have revolutionised application choice. Simply choose the modules you need, pay by the month and no IT involvement required. Free up more departmental time by reducing the number of resource hours required to maintain a spreadsheeting process and the cost-saving just got bigger.

Spreadsheet errors and inaccuracy are by far the most compelling reasons to consider a move to a specialist cash forecasting application. Finance and treasury cannot afford to make mistakes. Inaccurate cash flow forecasts can literally lay to ruin to a company’s business reputation and/or result in a financial loss or penalty. No scare tactics needed.

Mini Case-Study: Conviviality a ‘Spreadsheeting Horror Story’

(Source: The Guardian UK, 21 March 2018)

At first, the drinks retailer Conviviality said profits would be 20% lower than the £70m expected by the City, with £5.2m of the £14m hole that had opened up in its forecast, down to a spreadsheet error. The remainder was a reflection of weakening profit margins.

On 21 March 2018, the Guardian (UK) reported “Firm issues third profits warning; says it will meet investors to raise funds via a share placing’’. The company, in a stock exchange announcement, said it was holding meetings with investors to raise £125m via a share placing that would help it pay a £30m tax bill due at the end of the month, fund overdue payments to creditors and repay a £30m loan.

The company blamed the first shock profit warning on a spreadsheet arithmetic error made by a member of its finance team and weakening profit margins, and then admitted it had not budgeted for the £30m tax bill due this month.”

Conviviality has since gone into administration

Whether or not the use of spreadsheets was the sole cause of this bankruptcy is not clear, but it seems to have been a major contributor. Such cases are exceptional, but they do illustrate how relying on spreadsheets is not a sensible course of action for any finance & treasury team anywhere.

Many spreadsheets also contain, quite clever but complex, macros and apart from keeping these up to date, finance & treasury is responsible for ensuring their integrity. This is something that is not always feasible. Even when errors are spotted it is often very difficult to decode them, especially given the sheer size of the spreadsheets many finance and treasury folk utilise.

Embracing future-proof change

Readily available and affordable cash forecasting applications have, for those organisations who have embraced the benefits of technology, reduced risk exposure exponentially, facilitated real-time & accurate cash visibility, minimised human resource demand, and liberated finance leaders to take a more strategic role across the business. No-brainer.

Sometimes taking a leap of faith, moving away from the old and onto the new, can be a daunting decision. Historical hang-ups, ranging from less than favourable experiences with legacy systems, pre-conceived assumptions around cost implications, and work-flow disruption make it all too easy to decide to ‘leave well enough alone’. Before you take the decision to stick with the spreadsheet that’s done what it apparently ‘says on the tin’ for many years – let’s consider the following:

Back to the future

In a world where cyber security is of the utmost concern and data privacy, e.g., GDPR, is a regulatory requirement, can finance and treasury really afford to run their operations on spreadsheets? Spreadsheet security cannot and does not compare to the advantages of specialist systems that have been built with security in mind. Indeed, some spreadsheet applications lack even basic authentication security, can be easily copied and distributed outside the confines of the business without the knowledge or prior agreement of management.

Spreadsheets were built for convenience-only in a pre-internet world where cyber-attacks and data security were unknown and of no consideration. Spreadsheets were not built with security in mind.

Square peg in a round hole

Spreadsheets don’t grow with your treasury and finance needs. Organisations often try to adapt their spreadsheets to a growing business but soon realise that the complexity of doing so is almost impossible. Adding new accounts and deleting old accounts becomes challenging at the best of times, but managing this critical process in a spreadsheet, whilst trying to drive the business forward, is often a step too far, leading to errors and oversights.

Treasury and finance, by its very nature, consists of a number of different individuals performing a variety of activities, sometimes at the same time. This results in the sharing of valuable company information between several people and departments in any one day. Managing this process on spreadsheets can be difficult and nigh on impossible, even if some automation is achieved. Typically, only one person can update a spreadsheet at any one time so the workload that needs to be shared becomes inefficient and confusing. Maintaining full transparency around additions, edits, and alterations are off the table. Once an edit, or error, is made on the spreadsheet, it remains invisible and untraceable until something goes wrong. In addition, identifying the point of error-impact is often a time-consuming, futile, and frustrating exercise for some unfortunate departmental executive, even if they have the necessary investigative skills.

Doomed to repeat the same mistakes

Spreadsheets are not that good at quantifying or qualifying historical data, and treasury & finance needs this data regularly. That is not to say data cannot be stored in earlier spreadsheet versions, but due to the way they work, it is not a simple task to access, view, assess, and report this data as efficiently and effectively as modern cash management applications. Losing valuable historical data for comparison and variance purposes is a high-risk consideration. Accidentally saving over historic files, or indeed losing files altogether, is a terrifying experience we’ve probably all experienced at some stage in our careers. Notifying management of a spreadsheet faux pas is just as bone-chilling, remaining undisclosed and causing further inaccuracy to forecast outputs.

As alluded to in an earlier blog ‘Five expensive myths in Cash Forecasting’, there is a very real chance that the person who created the original spreadsheet has moved on and left the company. How many finance and treasury departments have found themselves in a position where a mega spreadsheet, long lauded as a ‘work of art,’ is no longer sufficiently supported and documented with non-existent instructions on how to maintain or update the worksheet.

Cassette recorders, big hair, leg warmers, the Rubik’s cube, Walkman, and mobile phones the size of small suitcases are all legacies from the 1980’s. Technology and hairstyles have moved on….. so should cash forecasting applications.