5 / 8
© 2017 Strategic Treasurer.
All rights reserved.
| 5 |
TREASURY UPDATE NEWSLETTER - 2017 Q 2
to determine timing and classification of receipts
and disbursements – an exercise that is extremely
challenging within a spreadsheet module. Still,
despite these inefficiencies, Excel offers the
unbridled ability to customize formulas and format
graphs, footnotes, comments and fonts, all of which
are critical when it comes to executive and board
level presentation.
ADVANTAGES OF A TMS OVER
BI SOLUTIONS & EXCEL
So then, how does a TMS compare, and how
feasible is it to expect a TMS to offer the same
level of reporting flexibility and data visualization
that other non-TMS solutions offer? For example,
business intelligence (BI) tools are increasingly
common among corporate finance departments
to aggregate and transform large data sets to
meaningful analytics. Still, without timely bank data
and insight to forecast performance, the dynamic
reporting layer won't yield the optimal business
insight.
To look at the superior value a TMS offers, it is
important to note that cash flow forecasting is an
iterative process; inputs are received, trends are
discovered, and assumptions are made.
However, one certainty with cash flow forecasting
is that therewill bevariances. Basedonmonth-to-date
actuals, or updates to cash flow timings, the initial
cash flow forecast will evolve into a new version. This
is where the TMS provides unique value compared
to Excel or other reporting and data visualization
tools, given that the bank statement connectivity is
seamlessly integrated within the TMS.
Awell-deployedTMSwill achieve 90+%global cash
visibility on a daily basis. By having the first insight
to global bank balance and transaction activity,
treasurers that leverage a TMS have the distinct
advantage of analyzing their company’s global cash
flow performance in near real-time, ahead of the
corporate accounting team or any other corporate
finance organizations. Today’s TMS solutions offer
intelligent and intuitive categorization rules, so
cash flow reported on the bank statements can be
analyzed against existing cash flow forecast line
items. The TMS can also automatically ‘snapshot’
forecast versions, so treasurers can compare
actuals to prior forecast assumptions, or analyze
multiple forecast versions alongside one another
with powerful analytics and variance commentary.
This opportunity to perform frequent and insightful
variance analytics aligns with the natural and iterative
process of cash flow forecasting, as it enables the
treasurer to update assumptions and cash flow timings,
and even commence working capital strategies, to
ensure cash flow targets are met. The demand for
variance analytics is increasing in importance for
treasurers and CFOs who are analyzing free cash
flow performance compared to initial strategy plans
and budgets, or when comparing the quarter-to-date
treasury directmethod versus the FP&A indirectmethod
that was communicated to Wall Street investors.
A well deployed TMS will achieve
90%+ global cash visibility on a daily
basis. By having the first insight to
global bank balance and transaction
activity, treasurers that leverage a TMS
have the distinct advantage of analyzing
their company’s global cash flow
performance in near real-time, ahead of
the corporate accounting team or any
other corporate finance organizations.
One certainty with cash flow forecasting
is that there will be variances. Based
on month-to-date actuals, or updates
to cash flow timings, the initial cash
flow forecast will evolve into a new
version. This is where the TMS provides
unique value compared to Excel or other
reporting and data visualization tools,
given that the bank statement activity is
seamlessly integrated within the TMS.
Often, treasurers spend excessive
amounts of time trying to uncover the
reasons for forecast error, scouring through
bank statements and accounting entries
to determine timing and classification
of receipts and disbursements – an
exercise that is extremely challenging
within a spreadsheet module.