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Redefining enterprise cash forecasting with a strategic vision

There are many articles about how the treasurer’s role is evolving from short term management of cash flow and risk to helping an organisation strategically plan for the future.

Treasury management systems have changed over the years, with most of the leading products having been released more than 20 years ago. All have migrated from their original design concepts, in cash positions, accounting or risk management, to incorporate increasing layers of complexity to meet new opportunities.

Redefining enterprise cash forecasting

This is often achieved by compromising the original design principals and the result is mostly effective if somewhat inefficient solution. The recent TMS vendor consolidation of various systems under an organisational umbrella ring-fences future development which can reduce responsiveness and stifle innovation.

With the development of strategic treasury, there is increased demand for modern analysis and decision-support technology, moving beyond transactional processing common to TMS and ERP solutions. Planning and forecasting are key elements of this,  although whether cash or sales based it is difficult to include this in an efficient way under most of the umbrella TMS frameworks currently available. Given the plethora of established TMS and ERP systems used in the enterprise world, it is disappointing that none of them includes a dedicated, easy-to-use, cloud-based forecasting product. Clearly, it was not their core vision and forms a minor part of their future strategy.

The best that most treasurers can hope for is a better way of importing data from their ERP system, TMS and banks to give a short term position. However current solutions are generally inaccurate by the time the information is available to the user and unresponsive to change or interrogation. Forward projections are limited by the short-term cash cycle and basic models derived from historic data, a risk if the business is not a straightforward ‘steady-as-we-go’ model, and few really are.

Relying on historical data and simple extrapolation-based machine learning is like forecasting in the dark. It can produce automated results but fails significantly at strategic change and risk analysis.


“Cash Management and Forecasting Will be the Focus of Treasury Operations over the Next Three Years”(1)

Respondents to a recent AFP survey highlighted just how critical technology improvements have become, identifying cash forecasting as the key focus for their operations, and showing an overwhelming reliance upon the use spreadsheets to collect forecast and positional data in the current systems landscape.

Technology used to support current treasury forecasting2

Almost all enterprise forecasting methods rely on a distributed spreadsheet. Needless to say, this is error-prone, manually intensive and generally disliked by the very people who have to use it - the business users across the group with the detailed, critical knowledge of the upcoming business activity.

In this method subsidiary business units have a data collection task imposed upon them from the centre and so will be inclined to supply the information in a reluctant and unengaged manner. The result of this is that the provenance of the data is poor, and any consolidated position will have to be adjusted based upon subjective views of the forecast accuracy within treasury.

This involves lots of manual work that is largely unaudited, a high-risk point in any strategic plan.

How does a strategic treasury break the cycle?

At Crowd Data Systems, we have taken a ground-up view of forecasting from both a detailed practical view and from a holistic strategic approach.

What is required is a method of truly engaging business units, to unlock their expert knowledge of the day-to-day process and the likelihood of trending changes. Engaged they would feel not only part of the ‘what’s happening now’ position but involved with a strategy for the future, mitigating risk.

This set the four key pillars that defined the design for our software, Vision.      

Source & Copyright©2019 – CROWD DATA SYSTEMS

With business units engaged in their own position analysis, treasury will benefit from real-time consolidation of the actively managed positions, and be able to overlay their own analysis and reporting - efficiently, and with audited control.

Vision addresses the practicalities of managing a granular, distributed position, rolling snapshots of forecasts through time and keeping as much detail as is required for full consolidation to any level.

SaaS solution

As a SAAS solution, enterprises can readily roll this model out to their subsidiary businesses with no IT infrastructure costs while retaining centralised control. More importantly the subsidiaries are engaged and get local benefit from a genuine built-for-purpose forecasting tool, allowing treasury and businesses to collaborate seamlessly on a more strategic future.




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