Cash management: Corporates look to the future
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Cash management: Corporates look to the future

The mechanics of treasury forecasting have come under intense scrutiny during the last nine months as corporates seek to optimize their cash management.


One of the most intriguing discussions at September’s EuroFinance conference was around whether or not firms were overcomplicating their forecasts.

The panel looked at how treasurers could assess the inaccuracy of 30-day and quarterly cash forecasts and improve the main drivers of accuracy, analyzing the internal and external metrics that had the most impact.

According to panel participant Daniel Blumen, a US-based treasury consultant and partner at Treasury Alliance Group, the main issue for treasurers is distinguishing between one-off problems – a delayed payment or a sale that did not materialize, for example – and structural issues, such as a lack of clarity on the process from the businesses providing the data.

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Daniel Blumen, Treasury Alliance Group

Looking at inaccuracy is critical because it is the only way to assess the quality of the forecast. However, different companies will look at different key performance indicators (KPIs) and time horizons, and some will use their forecast to assess their financing needs, while others will use it to assess their FX risks or manage their liquidity.

Identifying which input is the main driver of accuracy is the vital step when developing a new model and it is also the most difficult aspect of the process, explains Vincent Delort, senior treasury manager at JT Group.


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