best practice guide on achieving maximum cash visibility

An Action Plan for Improved Cash Visibility

December 11, 2014

© 2014 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 2

Steve WaldenManager, Treasury Operations

Mercy is the 6th largest Catholic healthcare system in the US and operates 32 Hospitals and 300 physician clinics in MO, OK, KS, ARK, employing 48,000 coworkers, 2000 doctors, and treating 3 million patients a year.

Guy SimonsAssistant Treasurer

TRW Automotive is a $18B multinational based in Livonia, Michigan. TRW supplies automotive system, modules, and components to automotive original equipment manufacturers and related aftermarkets.

Bob StarkVice President, Strategy

Kyriba is a cloud treasury technology provider, delivering software-as-a-service solutions to over 900 global customers for cash, treasury, payments, and risk management.

Today’s Webinar


Topics for Discussion

Importance of visibility

How to achieve visibility– Bank Connectivity– Cash Positioning– Cash Forecasting

Q&A with:–Mercy – TRW Automotive

Concluding Thoughts

Today’s Webinar


Importance of Visibility

Visibility is an enabler

Visibility Opportunity to make informed, effective decisions

Borrowing and Re-Financing

Investing/Cash Optimization

Risk Management/Hedging

Visibility is more than just bank account balances

Cash and Liquidity

Forecasts, Exposures and Financial Positions

How to achieve visibility


Barriers to Visibility

Source: 2014 AFP Risk Survey

Data and resources continue to be leading issues!


Techniques to Improve Visibility

*Visibility*

How do we overcome these issues?

1) Connectivity to banks – increase visibility into actual cash to 100%

2) Improve cash forecasting – create accuracy in projected cash so confident decisions can be made

3) Eliminate need for IT resources

4) Reduce costs

5) Make it easy


Connectivity Choice Description Best Scenario

Host to Host (e.g. FTP) Connect directly to the bank

Any North American bank

Regional Network (e.g. EBICS, Zengin protocols)

Multi-bank network (per

country)

Multiple banks or high volumes in a particular country

(i.e. France, Germany, Japan)

SWIFT Concentrator Use provider’s SWIFT BIC

Low account to bank ratio (e.g. 20 accounts at 10 banks)

SWIFT Alliance Lite 2 Entry to SWIFT for Corporates

Low payment volumesAccessed directly w/ SWIFT or SWIFT

partner, depending on desire to manage IT/monitoring of connectivity

SWIFT Service Bureau Comprehensive SWIFT for

Corporates

Medium/High payment volumesComplete outsourcing to

partner

Bank Connectivity


Bank Connectivity

If done right…

100% of desired cash balances will be known

Solution will be cost-effective; you won’t have over paid

Complete bank independence and flexibility to grow/change banking relationships

No IT Support will be required to maintain connectivity or changes in bank formats

Cash Forecasting


Perfecting the Cash Forecast

Path to Success

1) Collaboration – involving the right people

2) Consolidation – incorporating the right data streams

3) Measurement – feedback loop to measure and report on forecast accuracy


Forecasting – Incorporate the Right Data

Sources to build the forecast

User entry

Import from internal systems (e.g. ERP)

Import from spreadsheets

Recurring cash flows

Extrapolation/Trending of historical data

Internal transactionso Target balancingo Paymentso Financial transactionso Invoice netting


Forecasting – Importing Cash Flows

Importing cash flows doesn’t need to be an IT exerciseoMost systems will take any format, any ‘structure’,

and allow configuration in the system by the user


Forecasting – Recurring Items

Recurring cash flows will not be constant numbers

o Flexibility to support variation by day, week, month is important to reduce manual ‘tweaking’

o Best used to create a placeholder which is later replaced with more updated

forecast data from other sources

Example: Recurring Cash Flow model with daily variation


Forecasting – Modeling from Historical Transactions

*Visibility*

Steps:

1) Decide action and adjustments (e.g. average or trending of historic flows)

2) Select historic cash flows to extrapolate forward

3) Determine date/periods to project forward



Steps:

1) Decide action and adjustments (e.g. average or trending of historic flows)



Steps:

2) Select historic cash flows to extrapolate forward



Steps:

3) Determine date/periods to project forward


*Visibility*

Steps:1) Decide action and adjustments

(e.g. average or trending of historic flows)2) Select historic cash flows to extrapolate

forward3) Determine date/periods to project

forward



Perfecting the Cash Forecast

Path to Success

1) Collaboration – involving the right people

2) Consolidation – incorporating the right data streams

3) Measurement – feedback loop to measure and report on forecast accuracy


Forecast Lifecycle - Reconciliation

*Visibility*

1

2

3

4

Important to capture in the database every stage of forecast (to later measure forecast accuracy)

Q&A with Mercy and TRW


Steve Walden, Mercy

Two significant influences on cash forecasting strategy in recent years:

– Event/Disaster Management

– Regulation

Currently generate a 12 month rolling forecast– Forecast at corporate only; use high level categories– Rely on history and recurring items to project forward

Work with one primary bank; but flexibility is important

Reconciliation is currently daily

Next step: measure forecast accuracy for longer periods

Visibility at Mercy


Guy Simons, TRW

Download bank reporting daily from seven banks–US and Europe

Maintain multiple ZBA structures and cash pools globally

TRW operates treasury centers and shared service centers (SSCs) in multiple global locations

– SSCs deliver global visibility into payments

– Implementing a pay on behalf of model (POBO) so payments + intercompany movements is part of visibility equation

–Has simplified the number of banks and bank accounts needed to support the global business

Visibility at TRW


In Summary…

Key Benefits of Optimizing Visibility Visibility enables cash and liquidity

certainty

Greater accuracy = can confidently invest, repay debt, hedge exposures

Visibility offers opportunity to engage more strategically with management

Kyriba delivers Security Automation Monitoring No IT involvement


Webinar Resources

Best Practice Guide on Achieving Maximum Cash VisibilityLearn how you can improve your organization's cash visibility in order to make more informed, strategic decisions for deploying corporate cash.

GET GUIDE>>

Also, read our blog post on “Why cash visibility is critical – and not just if you’re cash-strapped”

THANK FOR YOUR INTEREST!

http://info.kyriba.com/Cash-Visibility-WP?source=SS

http://www.kyriba.com/blog/tim-wheatcroft/why-cash-visibility-critical-and-not-just-if-youre-cash-strapped


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best practice guide on achieving maximum cash visibility

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