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AUTOMATION OF CASH FLOW FORECASTING PROCESS
CFA Society Denmark May 7, 2013
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Dan K. Christensen, Country Manager Denmark
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Agenda
• Cash Flow Forecasting
– Why?
– Tools: Spreadsheet vs solution
– Process: Manual vs. automated
• 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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GAG
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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
– 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
Reporting units
Banks
TMS ERP 1 Purchase
Budget
Treasury Centre
ERP 2
Reporting units
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Automated
System integration: A/P
A/R
Treasury Management
ERP
Other systems
Bank connections, Reporting units
Straight through
processing
Treasury Centre
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Forecasts
Forecast period
starts Retrieving
bank data
Treasuries
check that all
entities have
reported
Retrieving data
from AR/AP
and TMS
Entities
check data
AUTOMATED AUTOMATED ENTITY
TREASURY
Entities enter
missing data and
adjust data
Forecasts
ENTITY
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Reasons or excuses
I do not have the time It is probably complicated
We do not have the
resources Maybe it is costly
We use excel
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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
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• 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?
• 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...
• 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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Solutions for Automating Cash Flows
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Payments Accounts Liquidity Invoices Netting Archive
OpusCapita®
Cash Flow Automation Platform
Global bank connections
via SWIFTNet
Direct bank connections
to Nordic banks via OpusCapita
Direct bank connections
to European banks
Payment
Factory Netting
Centre
In-House
Bank
Payment
Factory
Pla
tfo
rm
Sta
nd
ard
Mo
du
les
So
lutio
n
Standard
connections:
ERPs
Salary systems
TMS
etc.
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OpusCapita Liquidity background and current status
- First version available in early 90s...4th generation
OpusCapita Liquidity was launched 2010
- Strong focus on product delopment and professional
services
- 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
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Suitable for all environments
Exp
ress
Sta
nd
ard
Ultim
ate
for demanding needs
for turn-key automation
for a really quick start
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
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Dan K. Christensen
+45 5051 8200
