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Transforming cash: how to manage risk and improve cash management

May. 22 2020 by Alex Stevens, Pre-Sales Consultant - CCH Tagetik UK and Ireland

Performance Management Budgeting & Planning

Hands up who hasn’t had to do a 2020 reforecast? Never has the need been more pressing to manage risk and improve management of cash – after all, cash is king.

Many finance leaders are asking how to improve visibility of risk exposure and improve cash management as they assess the impact of the pandemic on business. That’s why I took some time to provide my thoughts on how the CCH Tagetik Finance Transformation Platform is giving a new meaning to cashflow planning and analysis. In my recent webinar “Trasforming Cash: How to manage risk and improve cash management”, I show how CCH Tagetik can support leaders throughout 3 easy steps:

  1. Assess the impact on your cash position of everything from revenue to expenses, from FX hedging to capital projects through the Modelling Dashboard. Thanks to a real integrated business planning combination of Cash Flow Analysis & Planning & Scenario Modelling, all the information you need is available at your fingertips.
  2. Go in depth with your analysis instantly for all primary statements and thereby get the agility to respond to changes and alterations in the market environment. 
  3. Check the impact of different scenarios using a powerful Scenario utility and reporting capability to capture multiple versions in a cycle and provide variance analysis before you restore and submit final versions.

Think about the 2020 budget which most of you will have completed and submitted at the end of 2019. With so many unforeseen events having emerged across all markets during the last quarter, finance need to respond by modelling multiple revenue, opex, capex, workforce scenarios and more applying advanced what-if analysis to accurately evaluate the impact on cash and identify cashflow risks; the first step in defining your strategy to mitigate them.

Stressful, we know. Less stressful if you can count on an agile solution that, for instance, provides you with the opportunity to see different snapshots within scenarios side by side – for example, a P&L with different revenue assumptions. Less stressful if you can modify sales quantities, or perhaps add a discount – and see, immediately, the effect ripple through the entire range of planning drivers. Less stressful if, once new assumptions have been defined, you can simply phase revenue recognition and have the correct impact in receivables and finally into cash based on your accounting profiles set in your system. Less stressful if, by quickly modelling new DSO (days’ sales outstanding) and DCO/DPO (days credits outstanding/days’ payments outstanding) assumptions you can easily see their effect, particularly on cash in and cash out.
I hear you asking: “what’s the secret that allows me to plan easily during these turbulent times?”

A truly integrated planning approach in a fully unified environment is key. When all planning processes are connected and linked to actuals, you always get an accurate, detailed and live insight into your business, available at your fingertips with confidence. But unification is not enough. Another important ingredient is true financial intelligence. When your system is empowered by a built-in double-entry financial logic that can recognize revenue from the P&L, convert into accounts receivable and assess the impact on cash, without the need for coding, well, all you have to do is simply build on top of accounting logic to define the next business strategy to apply. But I do think that the real secret is about having the power to get all the data you need, financial and operational, available in a single system, which gives the power to take informed business decisions and manage risk in this time of uncertainty. This will ultimately give you the visibility you need to get the answers to the new questions being asked.

If you want to know more about how CCH Tagetik enables you to analyse the impact of business changes on cash flow forecasts based on actual or planned revenue, providing visibility when you need it most, watch the entire webinar “Transforming cash: how to manage risk and improve cash management” here.

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