AUTOMATION OF CASH FLOW FORECASTING PROCESS

CFA Society Denmark May 7, 2013 AUTOMATION OF CASH FLOW FORECASTING PROCESS Dan K. Christensen, Country Manager Denmark [email protected]...
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CFA Society Denmark

May 7, 2013

AUTOMATION OF CASH FLOW FORECASTING PROCESS Dan K. Christensen, Country Manager Denmark [email protected]

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Agenda • Cash Flow Forecasting – Why? – Tools: Spreadsheet vs solution – Process: Manual vs. automated

• • • •

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Basic info about what to automate Challenges in automation Benefits from automation OpusCapita

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AFP Guide to Global Visibility of Cash Association for Financial Professionals, 2013

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AFP Liquidity Survey

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AFP Liquidity Survey

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Are your weapons up-to-date?

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Cash Flow Forecasting spreadheet vs. system manual vs. automated

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Spreadsheet vs. System • Personnel risk • Formula risk (“88% of spreadsheet have errors” /R. Panko, Professor IT Management, Uni Hawaii) • Manual work / automation • Database • Value for entities • Control –

Excel. Units often make changes to tables/sheets or leave out important information.



Liquidity system. The person in charge of liquidity management has full control all the time.

• Expandability –

Excel. Even the addition of just one new unit, currency or account into the Excel model requires a lot of work.



Liquidity system. Adding new units is easy, and the established liquidity management process can be applied to the new unit as well.

• Exchange rates –

Excel. Converting between cash flows in different currencies is difficult.



Liquidity system. The program automatically converts cash flows in different currencies into basic currency or the reporting currency of choice. Always fresh exchange rates

• User access

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Excel. Limiting user access is a lot of work, and access to the right information cannot always be guaranteed.



Liquidity system. It is easy to define and maintain both software- and company-specific access.

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Manual Treasury Centre

Reporting units Reporting units

Banks

Budget

Purchase

ERP 1

TMS

ERP 2

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Automated Treasury Centre

Reporting units

Bank connections, System integration: A/P A/R Treasury Management ERP Other systems

Straight through processing

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Forecasts

Forecast period starts

Retrieving bank data

Retrieving data from AR/AP and TMS

Entities check data

AUTOMATED

AUTOMATED

ENTITY

Entities enter missing data and adjust data

Treasuries check that all entities have reported

ENTITY

TREASURY

Forecasts

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Reasons or excuses It is probably complicated

I do not have the time We use excel

Maybe it is costly

We do not have the resources

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http://www.eusprig.org/humour.htm

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Basic facts about cash forecasting automation

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Materials retrieved from bank • Bank account statements – Opening balance – Actual cash flows

• Currency rates • Intra day transactions/balances

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Automated import of cash flow information • Different types of cash flows – Operative – Financial

• Different categories – Forecast – Actual – Cash flow budget

• Increased level of accuracy – Payment behaviour – Overdue reporting

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CASE Manual payment planning • Every morning following process: – Print bank account statements from internet bank – Print open payables due today from accounts payable – Manually check from which account to pay payments

• Very time consuming process • Solution: – Automate fetching information from bank and AP – Check from report if adjustment for default bank account is needed

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Other things to remember • Consolidation • Currency conversions • Maintaining of basic settings – Bank accounts – Users – Companies

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Challenges in automation

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How to trust automated cash forecasting • Process knowledge • Control of the process

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What does it take from organisation? • Management support • Centralised vs. de-centralised • Unifing processes across the group

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Benefits from automation

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Why to automate? • • • • • •

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Up to date information Control over process Savings in time and money Eliminating errors Standardisation Increased forecast accuracy

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CASE Actual vs Forecast

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Before and after!

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Things to consider... • • • • •

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How to collect the actual data? Comparisation on daily, weekly or mothly basis? How deviation should be measured, percentage or... Could correlations be utilized? Feedback to the entities, how to motivate?

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About OpusCapita

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Facts And Figures • OpusCapita is an expert in automated cash and treasury management solutions –

centralised liquidity management systems and supporting finance and electronic invoice processing solutions

• Offices in Espoo, Tampere, Stockholm and Copenhagen´+ 10 Itella Information locations in Europe • Customers: around 1500 companies and public sector organisations in the Nordic Countries • Continuous collaboration with banks, information providers and software providers

• OpusCapita is an Itella Information company

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Platform

Standard Modules

Solution

Solutions for Automating Cash Flows

Payment Factory Payment Factory

Netting Centre In-House Bank

Payments

Accounts

Liquidity

Netting

Invoices

OpusCapita® Cash Flow Automation Platform Direct bank connections to Nordic banks via OpusCapita

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Direct bank connections to European banks

Archive

Standard connections: ERPs Salary systems TMS etc.

Global bank connections via SWIFTNet

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OpusCapita Liquidity background and current status -

First version available in early 90s...4th generation OpusCapita Liquidity was launched 2010

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Strong focus on product delopment and professional services

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Market leader with around 300 Nordic customers

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Reporting dashboard

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Unit Entry

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Unit entry monitor

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Best practice reports Treasury reports • • • •

Aggregated short/long forecast Company short/long forecast Currency short/long forecast Bank account report: all accounts structured by pools and other accounts separate • Actual vs. Forecast follow-up • Overdue report (if A/R is integrated)

Subsidiary reports • Company short/long forecast • Currency short/long forecast • Actual vs. Forecast follow-up

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What is possible to do in OpusCapita Liquidity? • Reports – – – – – – –

Forecast currency flows - yes Forecast currency flows by base currency – yes Forecast currency flows by subsidiaries – yes Follow hedge values – yes Follow hedge efficiency – yes Save history of hedge reports – yes Compare actual currency flows with forecasted currency flows - yes

• Export and import of information – – – – –

Import hedge values from TMS – yes Export cash flow data to TMS – yes Enter financial cash flow manually – yes Import cash flow from ERP – yes Enter operational cash flow manually - yes www.opuscapita.com

Suitable for all environments

for demanding needs

Ultimate

for turn-key automation

Standard

for a really quick start

Express

OpusCapita Liquidity Management is available as - a service (cloud) - on-premises delivery - hosted delivery, depending on the edition you choose.

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THANK YOU Dan K. Christensen [email protected] +45 5051 8200

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