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  • CFO Europe Magazine

Cloudy or Clear?

Fundamentally a simple concept, forecasting cash flow nonetheless proves elusive in practice.

This is where software from XRT comes in. Now, before the general annual budget is signed off, the treasurer plugs the plan into the software, and with a push of a button, he receives a liquidity forecast that chimes with the budget figures. Because predicting the next blockbuster film is anybody’s guess, Van Der Haegen’s aim is to keep the firm’s cash flow stable over the year, avoiding costly short-term borrowing to fill shortfalls or the opportunity cost of unexpected surpluses lying idle.

“The only thing we do based on the liquidity plan is shuffling — treasury doesn’t cancel or add anything new to the budget,” says Van Der Haegen, noting that marketing programmes are often slid into different times of the year. The results so far are encouraging — last year, more predictable cash flows, in part, allowed Kinepolis to cut net debt by a quarter, and annual interest charges by a third, on the year before.

While such technology can be hugely beneficial, finance managers agree that the only way to improve forecasting meaningfully is to enable a better flow of data between the enterprise-wide systems used by operations (ERP, for example) and treasury management systems.

The key is automation, says Leica’s Straub. By the end of the year, he wants to roll out IT/2 NET, a web-enabled add-on tool, to his treasury software that pulls in information from non-treasury systems automatically. “I want to make the information that subsidiaries provide more accessible, and also open up the treasury system as an information tool for them, so each unit makes decisions with cash flow in mind,” says Straub.

So does this mean that treasury, that quintessential “back office” function, will encroach on operations’ turf? Straub, won’t say, but concedes, “That’s always a bit touchy. It’s not always easy to convince people to do what’s best for the whole company rather than what’s best for their personal interests.”

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