Accurately Forecasting Your Cash

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Accurately Forecasting Your Cash

• Julian Small Planning Consultant

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Contents

• Turbulent Times!!!
• How Cognos Software Can Help
• Creating a Cashflow Forecasting Model
• Reporting Back to Directors
• Scenario Planning and Automation
• Questions?

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Turbulent Times

• Five recommendations to improve cash flow
  forecasting Financial Director Publication
• 1. Speed of forecasting cycle
• 2. Informal and non financial data
• 3. Standard process
• 4. Technology
• 5. Key items

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Turbulent Times - Continued

• When we talk about the sales forecast I can tell
  you that 50 of the companies are able to
  forecast within 5 accuracy. When we look at the
  earnings forecast the number goes down to 33.
  When we look at the cash flow forecast the number
  is down again to around 20. And that, I think,
  is a clear message in most companies there
  remains a huge challenge to improve the accuracy
  of forecasting
• Dr Fritz Roemer Hackett Group

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Turbulent Times - Continued

• PWC 10 Fundamental Priorities to Surviving the
  economic downturn
• Cash is king
• Reliable management information is key
• Plan for different scenarios

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Turbulent Times - Conclusion

• Major focus on cash management
• Requires investment
• Collaborative process
• Part of standard routine

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How Cognos Software Can Help

• Existing software users
• Integrated with the PL
• Rolling timescale
• What if scenarios
• Flags to highlight cash issues

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Creating a Cash Flow Forecasting Model

• Company chosen is Gourmet Foods PLC
• Existing PL model to create a receipts and
  payments cube
• Rolling Weeks cube will automate timescale
• Version control techniques

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Scenario Planning

• Waitburys are no longer ordering
• Add Version 2
• Copy Version 1 data into Version 2
• Version 2 and Version 1 Variance
• Model Update Macro

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Summary

• Produced receipts and payments cash flow
• Payment Profiles used to translate PL values
  into cash values
• Rolling forecast methodology
• Report for Directors
• Version control

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Questions?
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PWCs 10 Fundamental Priorities

• Take a Closer Look
• Act Decisively
• Remember Cash is King
• Focus on What Really Matters
• Manage Your Cost Base
• Reliable Management Information is Key
• Plan for Different Scenarios
• Recognise the Value of People
• Take Stakeholders With You
• Take Advantage of Opportunities