Agenda

1 2 3

4 5 6

Introductions Context for survey Survey results

Best practices for Cash Forecasting

Q&AConclusion

Introduction

Introduction

Context for Survey

Limitations of Cash Forecasting – Myth or Reality?

Time consuming

• Processing - Data collection/Data entering

• No time left for actual process (too many spreadsheets?)

Prone to human error

• One typo can make your whole forecast wrong

• Lack of proper review/No proper version control

Exposed to continuity & key man risk

• Having multiple people building your forecast, the risk of unrealistic forecasts will grow

• Numbers can get lost

Corporate Debt now 9.8Trn or 40% of net worth. Too high?

Too Much Debt – When forecasting becomes important

• Manufacturing (28%)• Retail (12%)• Technology (11%)• Transportation & Distribution (10%)• Energy 7%• …

• CFO (35%)• Controller (16%)• Treasurer (12%)• Treasury Director (5%)• Treasury Manager (3%)• …

10+ Job titles

14+ Industries

From $50 million tomore than $6 billion

• < = $50 million (35%)• $50 - 250 million (24%)• > $6 billion (11%)• $1 - 2 billion (8%)• $250 - 500 million (8%)• …

225 Respondents

Context for Survey

Cash Forecasting remains a challenge - Example

RedEnvelope lose more than a quarter of their value

Due to a budgeting error that resulted in an overestimation of gross margins.

Cash Forecasting remains a challenge - Example

Companies Are Finding More Accounting Flubs

“An uptick in financial restatements from public companies through the first half of the year could derail a decadelong streak of improvements”

– Sept 20, 2018

Cash Forecasting remains a challenge - Example

University of Toledo Loses $2.4 Million in Projected Revenue

Lessons learned: Future-looking financial statements should have extra scrutiny and review. User training would also help prevent these formula-based errors.

Cash Forecasting remains a challenge - Example

Westpac jumps the Gun on Profit

Profit were embedded in a template of last year's results and were accessible with minor

manipulation of the spreadsheet.

Cash Forecasting remains a challenge - Example

Fannie Mae Discovers $1.3 Billion "Honest" Mistake

Lesson learned: When billions are at stake, it's best to have a financial peer review the documentation.

Survey Results

1. Cash forecasting remains the top issue

2. Time is money

3. Processing against the clock

4. A TMS is not made for Cash Forecasting

5. No proper reward structure based on cash flow

Top 5 findings

What is the most important issue for your company over the next year?

Cash forecasting remains the top issue

Ma

jor

go

als

Cash Forecasting Process

Working Capital Management process

• Analyzing operational

cash flow (+ / - )

• Funding subsidiary needs

• Meeting targets

• Freeing up working capital

• Determining requirements for

external financing

• Providing targets for working

capital improvements

Do you use Excel Spreadsheets for the following tasks?Preparation

How are your forecasts prepared?

Do you use Excel Spreadsheets for the following tasks?

Optimizing cash streams in a complex environment

What are the limitations of using spreadsheets to perform?

Optimizing cash streams in a complex environment

What financial systems are used when performing the following functions?

A TMS is not made for Cash Forecasting

Staff

How many FTE are involved in the activities below (average)?

What percentage of staff resources above are spent on the following financial activities?

What percentage of staff resources are spent on creating/updating cash forecasts?

Processing against the clock

Which metrics below does your company use and which ones are used to reward its business units?

No proper reward structure based on cash flow

Best Practicesfor Forecasting

ERP

¥$€

£

Multi - Entity

Multi - Bank

Complex ERP

Multi - Currency$

ERP

ERP

Cash Management in global & complex businesses is challenging

01 02 03 04 05 06

Understand your working capital drivers

Understand your cash flow drivers Define your Cash

forecasting horizons

Define your Cash forecasting sources per time horizon

Integrate and consolidate the data

Define your cash forecast logic / assumptions /Metrics

Effective cash flow forecasting in 6 steps

Effective cash flow forecasting in 6 steps

Integration with different bank statement formats

Short-term forecast:Purchase orders,Purchase invoices, Vendor master data

Other sources

Input & Mgmt of Non-ERP data

Cash projections, purchase budgets

Treasury flows

Payment runs, historicals …

Projects, Capex, Payroll, Taxes, Direct Debits (Rent, Leasings…)

Banks

Throughour available

ERP connectors(plug & play)

Our platform

Data sources

Analysis & Simulations

Refresh• daily of ad-hoc• incremental or full

ERP

(With audit trail in case of manual input)

(from TMS or managed through Cashforce)

• short vs. long term• forecast vs. actuals• forecast vs. forecast• what-if scenarios

Bank Balances (CODA & manual updates payment layer)

Smart forecasting logicSmart algorithms that make your cash

forecast really accurate.

(Excel, Business Warehouses,...)

05Define clear system relationships to consolidate the process

Conclusion

1. Cash forecasting remains the top issue

2. Best practice requires an integrated approach to forecasting

3. Look beyond classic TMS for Cash Forecasting

4. Form strategic partnerships : CFO/FP&A/Treasury => single version of truth

5. Create a reward structure based on cash flow

Conclusion

Q&A

Q&A?

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