A Cloud-based solution to integrate & improve Cash Flow ... · Mobilize Cash Fund / Invest Analyze Exposure Hedge Account Processing What-if Quantitative variance Qualitative variance

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A Cloud-based solution to integrate & improve Cash Flow Forecasting

PRESENTED BY:

Stephane Curcio,Head of Sales Enablement Europe


Cash Flow Forecasting: Why and Who?Cash forecasting helps achieve several critical internal and external objectives, focused on liquidity risk management and overall business performance Stakeholders

Cash Flow Forecasting Objectives

✓

✓

ExecutiveManagement

✓

Financial PlanningAnd Analysis

✓

✓

CorporateTreasury

Regional / LocalTreasury Center

Capital & Long Term Investment Planning

Subsidiary Dividend Repatriation Strategy

Shareholder Dividend PlanningManagement Performance Reporting

Company Valuation / Credit Rating

Short-Term Liquidity Management ✓✓

Strategic Investments Planning ✓✓ ✓

✓Short-Term Investments Yield ✓

✓

✓

✓ ✓ ✓

Debt Covenant Compliance ✓ ✓ ✓

FX Exposure Management ✓ ✓✓


What kind of Cash Flow Forecast is appropriate?

Near-Term Medium-Term Long-Term

Objectives Daily cash positioning, invest & borrow decisions

Liquidity planning, borrowing decisions

Long-term capital management and earnings protection

Horizon 1 day – 4 weeks 13–18 weeks 12–18 months

Detail Most granular, account-level details

Medium Summary-level detail; focus on balance sheet, business categories

Frequency Daily Weekly Monthly or Quarterly

Update Intra-day / as needed Weekly Monthly


Aiming for an Integrated CFF loop

Consolidated forecast

collection

Forecast modeling

Forecast approval & reporting

Variance analysis

Multi-Source Connected Platform

Subsidiaries

Corporate (legal, tax,payroll, finance)

Systematic input

Bank balances / transactions

ERP (AR / AP)

Treasury transactions

Real time integration

Stakeholders’ Feedback loop

Forecast refinement


Ways and Means to Forecasting efficiency

Archive

Export

Reconcile

Mobilize Cash

Fund / Invest

Analyze Exposure

Hedge Account

Processing

What-if

Quantitative variance

Qualitative variance

Variance KPIs

Machine-Learning extrapolation

Modeling

Approval workflow

Positioning

Internal template

Rolling / calendar

Bulk amendment

Consolidating

Type and sub-type

Consolidation category

Value date

Account

User-defined zones

Attachments

Categorizing

API, file interface

Drag & drop

Online sheet

Copy & paste

Recurring Flows

Trading flows

One-off

Sourcing

62019 Kyriba Corp. All rights reserved. | Proprietary & Confidential 2019 Kyriba Corp. All rights reserved. | Proprietary & Confidential

✓ To eliminate the risk of obsolescence

✓ Shifting your IT role from hosting to evaluation

✓ Ensure Business continuity and Infrastructure Disaster Recovery

✓ Platform and app Scalability

✓ Benefit from Frequent standardised updates

✓ Ensure Regulatory Compliance (e.g. GDPR, local data laws, MMF regulation, Solvency II)

Why Forecasting in the Cloud?


Business Benefits: What we’ve seen so far▪Mobilize cash quicker, through enhanced balances & transactions visibility

▪Protect against currency volatility: better forecasting = better exposures

▪ Yield/Cost of debt: drive more accurate short-term investing & financing

▪ Internal ROI: determine optimal intercompany cash allocation

▪ Increase Free Cash Flow: fund strategic initiatives- Capex projects for organic growth- M&A opportunities- Share repurchase programs, dividend increase

▪Management Reporting: enhance executive and shareholder confidence- CFO reporting- Board of directors- Rating agencies- Earnings and quarterly reporting

▪ Reduce operational and technological risks- Simplify system “touch points” and ensure scalability- Minimize any direct input and manual uploads, increase controls- Eliminate the "key person" risk

82019 Kyriba Corp. All rights reserved. | Proprietary & Confidential2019 Kyriba Corp. All rights reserved. | Proprietary & Confidential

A Nordics Use Case:Implementing Cash Flow

Forecasting


Sample Project objectives▪ Treasury goals include managing financial (incl. liquidity) risks and

related exposures in a centralized manner with optimised and scalable tools and resources

▪ Scope includes bank connectivity, cash position, forecasting and variance among a few other topics and functional areas

▪ Forecast-impacting business areas includes Money Market debt, bank facilities, interco loans, FX exposures and hedges

▪ Integration points includes 4 key banks, 1 ERP, 2 Management Information systems

▪Operational constraints included assets (incl. human) high mobility, jurisdiction changes


Financial forecast

BI

ERP

Architecture (excerpt)


Forecasting Target Operating Model

Consolidated forecast

collection

Daily Forecast Archiving

Forecast reporting &

export

F vs.A Variance analyses: daily, Current / Prior

Year

A Connected Scaling Platform for Analytics

In-System upload

ERP extract Stakeholders’ Feedback loop

Forecast refinement

Bank balances & transactions

Treasury transactions

Real time integration

Payment orders & files

Recurring forecast transactions


Cash flow forecasting lessons learnt

• Define the ultimate group-wide benefits of forecasting outcome

• Include corporate strategy, financial targets and regional growth objectives

• Enable a joint ownership between Treasury and submitting stakeholders

Operating Model

Process• Identify the goals, audience, frequency and time frame

• Analyse, corroborate and learn from variances

• Focus on the critical, most important line items in variance

Outcome• Leverage accuracy for corporate capital allocation strategies at the time

• Increase assurance and confidence in Free Cash Flow analysis

• Collaborate and communicate around multi-level variances

132019 Kyriba Corp. All rights reserved. | Proprietary & Confidential2019 Kyriba Corp. All rights reserved. | Proprietary & Confidential

What’s Possible and what’s next?

Emerging trends and Insights in Forecasting


Leveraging the power of analyticsA

R &

AP • Supply and

customer spend patterns

• Supplier AP and clients AR clusters

• Spend open to finance or discount

• Understand and optimize DPO / DSO

Ris

k • Directly convert forecast into exposures

• Model and simulate exposure portfolios

• Determine Best Hedging Strategies on future exposures

Liq

uid

ity • Reduce accuracy

variability

• Clear the room for Machine-Learning prediction, prescription and decision tree design

• answer the "why?" of forecast instead of just the "what?"


Thank You!

Documents

A Cloud-based solution to integrate & improve Cash Flow ... · Mobilize Cash Fund / Invest Analyze Exposure Hedge Account Processing What-if Quantitative variance Qualitative variance