Bringing supply chains on-shore - for example by Nutella relocating from Turkey - might upset the environment and local ecology, reports the FT.  Changes to the supply chain will certainly consume capex and working capital, says Cash for Invoices Limited - the single invoice buyer.  

Farmers in Italy and Turkey affected by the supply chain shift of Nutella could each benefit from using invoice finance to finance the increase in demand for cash, says Cash for Invoices Limited.

Farmers will need cash to build the local infrastructure to supply Nutella. Other will need cash to offset reduced crop production and sales if growing hazelnuts locally reduces yields of other crops or necessitates additional expense.  Farmers in Turkey will need cash to offset the loss of revenue from no longer supplying hazelnuts to Nutella.

Invoice finance is a readily-available source of cash for working capital but it is only available to businesses that trade on credit, meaning they issue invoices to their customers for future payment of goods and services sold.  It can also be used for capex though less readily.

Cash for Invoices Limited of Chiswick London is an invoice finance company that specialises in buying single invoices.  An SME can sell one or more of its trade invoices to Cash for Invoices Limited for cash.  Unlike other providers, Cash for Invoices Limited only charges ONE fee, and gives the SME these other benefits:

NO commitment on the SME to sell further invoices  NO charge over assets NO debt NO arrangement exit, maintenance or other fees other than a simple single charge for the cash paid in advance of the invoice payment date  and NO financing facility  

Cash for Invoices Limited of London offers a simple, transparent and flexible invoice finance service that helps the SME or sole trader get the essential cash they need.

To find out more contact Cash for Invoices Limited here.

Easyjet should use invoice finance not just cost-cutting or novel ways to extract more money from air passengers, to recover the cash element of its £2bn pandemic loss (reported in the FT), says Cash for Invoices Limited - the single invoice buyer.  

Invoice finance is a readily-available source of cash for working capital but it is only available to businesses that trade on credit, meaning they issue invoices to their customers for future payment of goods and services sold.  It can also be used for capex though less readily.  If Easyjet runs B2B services, such as cargo shipping and business travel, then it might issue invoices, but they are not going to invoice their retail passengers

Cash for Invoices Limited of Chiswick London is an invoice finance company that specialises in buying single invoices.  An SME can sell one or more of its trade invoices to Cash for Invoices Limited for cash.  Unlike other providers, Cash for Invoices Limited only charges ONE fee, and gives the SME these other benefits:

NO commitment on the SME to sell further invoices  NO charge over assets NO debt NO arrangement exit, maintenance or other fees other than a simple single charge for the cash paid in advance of the invoice payment date  and NO financing facility  

Cash for Invoices Limited of London offers a simple, transparent and flexible invoice finance service that helps the SME or sole trader get the essential cash they need.

To find out more contact Cash for Invoices Limited here

Consumer product sellers continue to spend on advertising even though product input costs are rising (inflation) (reports the FT).  In other words, ads are not being forsaken because of rising inflation and the need to contain operational costs, says Cash for Invoices Limited - the single invoice buyer.  

Regrettably, some advertisers and their advisers don't know whether the cost of specific advertising is worth it in terms of revenue generated.  What is certain is cash is being spent to run such campaigns.

Invoice finance is a readily-available source of cash for working capital needs such as funding advertising campaigns, and it can fill the gap before revenues are received in cash.

Invoice finance is only available to businesses that trade on credit, meaning they issue invoices to their customers for future payment of goods and services sold.  It can also be used for capex though less readily.  It's likely advertisers will not pay in cash but by invoice, so the advertising agents can sell those invices for cash to fund their other projects and their working capital.

Cash for Invoices Limited of Chiswick London is an invoice finance company that specialises in buying single invoices.  An SME can sell one or more of its trade invoices to Cash for Invoices Limited for cash.  Unlike other providers, Cash for Invoices Limited only charges ONE fee, and gives the SME these other benefits:

NO commitment on the SME to sell further invoices  NO charge over assets NO debt NO arrangement exit, maintenance or other fees other than a simple single charge for the cash paid in advance of the invoice payment date  and NO financing facility  

Cash for Invoices Limited of London offers a simple, transparent and flexible invoice finance service that helps the SME or sole trader get the essential cash they need.

To find out more, contact Cash for Invoices Limited here.

The FT reports that retail and hospitality landlords have suffered cashflow shortages during the pandemic, but office space landlords continue to get their rents from tenants whose offices even though their offices are empty because of homeworking.  

For both types of landlords and retail and hospitality landlords especially, invoice finance is not an option to generate cashflow.  That is basically because their business models do not involve regular issues of invoices for payment of rent, says Cash for Invoices Limited - the single invoice buyer.  

Invoice finance is a readily-available source of cash for working capital to businesses that trade on credit, meaning they issue invoices to their customers for future payment of goods and services sold.  Asset securitisation would be an option for the bigger landlords.

Cash for Invoices Limited of London offers a simple, transparent and flexible invoice finance service that helps the SME or sole trader get the essential cash they need.  To find out more contact Cash for Invoices Limited here.

The global shortage of container ships is adding to supply chain disruption caused by a shortage of containers, reports the FT.  The need to retool and redesign ships inline with environmental rules, will demand massive cash investment both initially and ongoing, says Cash for Invoices Limited - the single invoice buyer.   

Invoice finance is a readily-available source of cash for working capital and capex needs of shipbuilders, and it can complement other sources of finance such as banking and capital markets, and money markets, says Cash for Invoices Limited. 

For the many freight companies flush with cash from charging high freight prices, invoice finance might be of less importance, but for the importers and exporters that pay those sky-high costs, invoice finance could stave off insolvency.

Invoice finance is only available to businesses that trade on credit, meaning they issue invoices to their customers for future payment of goods and services sold.

Cash for Invoices Limited of London offers a simple, transparent and flexible invoice finance service that helps the SME or sole trader get the essential cash they need.  To find out more contact contact Cash for Invoices Limited here.

There will be a high cost to refurbish offices to make them comply with new UK energy efficiency rules starting  2023, reports the FT.   For some big property owners, it will means spending hundreds of £ millions in cash on upgrading their unfit buildings.  

Landlords already struggling to collect rent from retail tenants and so short of cash, could get deeper into financial distress and face a cash crisis, warns Cash for Invoices Limited - the single invoice buyer.   

Invoice finance is a readily-available source of cash for working capital and capex needs of many businesses, and it can complement other sources of business finance such as banking and capital markets, and money markets, says Cash for Invoices Limited.  

Invoice finance is only available to businesses that trade on credit, meaning they issue invoices to their customers for future payment of goods and services sold.  

Cash for Invoices Limited explains how single invoice finance works:

What is invoice finance
Cash for Invoices Limited of Chiswick London is an invoice finance company that specialises in buying single invoices.  An SME can sell one or more of its trade invoices to Cash for Invoices Limited for cash.  Unlike other providers, Cash for Invoices Limited only charges ONE fee, and gives the SME these other benefits:

NO commitment on the SME to sell further invoices  NO charge over assets NO debt NO arrangement exit, maintenance or other fees other than a simple single charge for the cash paid in advance of the invoice payment date  and NO financing facility  

Cash for Invoices Limited of London offers a simple, transparent and flexible invoice finance service that helps the SME or sole trader get the essential cash they need.

To find out more about Cash for Invoices Limited's single invoice finance service, contact Cash for Invoices Limited here

Cinema owners are exposed to immediate streaming of new film releases and to those new releases being box office flops.  On top of that, they are under pressure from Wall St pressuring film studios to stream immediately on release (FT).

Just like other cash-based consumer-facing sectors such as High street retailers and hospitality, companies cannot fall back on invoice finance to generate cash when the revenue dries up, says Cash for Invoices Limited - the single invoice buyer.  

Invoice finance is a readily-available source of cash, but only for businesses that trade on credit, meaning they issue invoices to their customers for future payment of goods and services sold.  

Cash for Invoices Limited explains how single invoice finance works:

What is invoice finance?
Cash for Invoices Limited of Chiswick London is an invoice finance company that specialises in buying single invoices.  An SME can sell one or more of its trade invoices to Cash for Invoices Limited for cash.  Unlike other providers, Cash for Invoices Limited only charges ONE fee, and gives the SME these other benefits:

NO commitment on the SME to sell further invoices  NO charge over assets NO debt NO arrangement exit, maintenance or other fees other than a simple single charge for the cash paid in advance of the invoice payment date  and NO financing facility  

Cash for Invoices Limited of London offers a simple, transparent and flexible invoice finance service that helps the SME or sole trader get the essential cash they need.

What is an invoice?
Invoices are a form of trade receivable, i.e., they are an asset on a company's balance sheet representing money to be received by that company at some future date - at the time the debtor pays the invoice.   At that time, the debtor (payer of the invoice) will no longer appear on the company's balance sheet and instead it will be replaced by an equal amount of cash (which is also an asset).  There is no net increase or decrease in assets, merely conversion from one to another.  

Bad debt?
If that debtor does not pay the invoice bought by Cash for Invoices Limited, then the asset (the invoice) will be written off as a bad debt (a cost in the profit & loss account) and invoice assets (trade receivables) will then reduce ( because no cash came in from the invoice debtor).  Granting time (credit) to buyers (by the SME) to pay for their purchases is therefore an example of credit risk for the SME that gives customer time to pay for goods or services.

If later - perhaps through credit collection procedures - the debtor pays the invoice, then the bad debt is added to the profit & loss account as a profit (income) and cash increased by the amount received.  The assets (cash) increase and are offset by an increase in profit (equity on the balance sheet).  All is well again.

Selling an invoice to Cash for Invoices Limited
Cash for Invoices Limited is a provider of cash and is not a debt collector, so it only buys SME invoices that are not in default, i.e., where the debtor has failed to pay the invoice.

Before the debtor defaults, the SME can sell the invoice to a single invoice finance buyer - such as Cash for Invoices Limited.  The SME wants to exchange an invoice for cash - perhaps it needs the cash sooner than the invoice payment date.  Cash for Invoices Limited will consider the offer and if accepted will provide a Quote of the terms and conditions of the invoice that the SME wants to sell.  

There is no commitment for the SME to sell, and no commitment for Cash for Invoices Limited to buy the invoice on offer for sale.  

Cash for Invoices Limited will make an offer after conducting due diligence on the selling company and on the debtor especially.  The debtor is a key concern for Cash for Invoices Limited because if there is a subsequent default in payment of the invoice, then Cash for Invoices Limited will not require the seller to buyback the invoice.  The invoice sale is therefore non-recourse (except where the SME's owner or director(s) and so Cash for Invoices Limited has to suffer the consequences of a default.

Cash for Invoices Limited has the right to commence steps to recover the debt.  These can include issuing letters for payment, appointing a solicitor, making a court claim, or making a claim under a credit insurance policy.  

Personal Guarantee in the event of invoice default
Cash for Invoices Limited might require a personal guarantee of the director(s) of the SME who is selling the invoice, in case the invoice sold is not repaid by the debtor.  

Retention to mitigate credit risk
To mitigate the potential costs of trying to recover payment on an invoice that Cash for Invoices Limited purchased but which goes into default, Cash for Invoices Limited will retain up to 10% of the value of that invoice from the purchase price.  If there is no default (the debtor pays the invoice on time and in full) then Cash for Invoices Limited will pay the full amount of the retention to the seller when the debtor pays the invoice.

Features of single invoice finance offered by Cash for Invoices Limited
In addition to being non-recourse (except where a personal guarantee is provided), Cash for Invoices Limited does not require a commitment from the seller to sell all its invoices, nor will Cash for Invoices Limited charge an arrangement fee for a purchase.  

Cash for Invoices Limited will not ask for ongoing fees because there is no facility between the seller and Cash for Invoices Limited. The transaction is entered into whenever the SME needs cash and Cash for Invoices Limited agrees to purchase the single invoice or multiple invoices.  Compared to bank factoring facilities, Cash for Invoices Limited's single invoice finance service is far more simple and has no tie-ins and far fewer fees, in fact, just one fee.

Cash for Invoices Limited's single invoice finance service therefore helps companies (sole traders, SME, charity, social enterprise, and limited partnerships) who have trade invoices and need cash.

To find out more about Cash for Invoices Limited's single invoice finance service, contact Cash for Invoices Limited here

Cash for Invoices Limited will consider buying invoices where the SME and its debtor are located in Ealing, Hounslow, Hammersmith, Richmond, Kingston, Harrow, Acton, Brentford, Chelsea, Kensington, Holland Park, Barnet, and the north, south, centre, and east of London.  Cash for Invoices Limited will also consider invoice purchase from other parts of the UK.

The previous post said it is hard enough for a business to making money, without wasting it on unnecessary bank charges so any process that can reduce a company's bank charges is welcome by a corporate treasurer.  Payment netting is one such process.
 
In essence, money paid out of bank accounts held at a company's subsidiaries can be netted off so the number of payments is smaller, or there might be no payment to make on a net basis. 

Netting enables a company to reduce its number of payments and so reduce its bank payment charges, which saves money and so increases cashflow and profits.

With a multinational company making tens of thousands of transfers to and from its dozens of subsidiaries across the globe, the savings for a Treasurer from netting those domestic and international cash transfers can run to the £millions per annum. 

There will also be a substantial saving of time from the reduced number of payments.  Of course, care needs to be taken to comply with tax, accounting, and local rules governing netting of cross-border payments, and transactions should be conducted on commercial terms between subsidiaries.

To discuss Cash or Treasury management for your company, including interim Treasury management, funding, and financial risk management, contact me for a free, confidential chat without obligation.

It is hard enough for a business to make money, without wasting it on unnecessary bank interest charges, so any process that can reduce a company's overdraft charges or better still, generate additional interest, is welcome by a corporate treasurer.  Cash pooling is one such process.

In essence, bank accounts held at a company's subsidiaries can be stand alone so any surplus earns interest, usually peanuts, such as 0% or 0.1% per annum.  Any overdraft is charged interest, usually a very high rate, such as 8%pa.

To avoid paying overdraft interest, stand alone bank accounts should be pooled and netted off each day for interest calculation purposes.  That way, the company avoids overdrafts or reduces them by the amount of surplus cash it has on some of its accounts.

A simple example will illustrate the savings to be made from cash pooling:

A company subsidiary (A) has an overdraft of £100K and is charged 8%pa overdraft interest, so £8K per annum.  Subsidiary B however always has a surplus of at least £100K on its bank account.  It earns a generous 1%pa (£1K).

By pooling the two accounts, the company will avoid paying £8K overdraft interest per annum, and make a net saving of £7Kpa.

With multinational companies holding thousands of bank accounts across dozens of subsidiaries across the globe, each with surpluses or deficits of cash, the savings for a Treasurer from effective international cash pooling can run to the £millions per annum.

To discuss Cash or Treasury management for your company, including interim Treasury management, funding, and financial risk management, contact me for a free, confidential chat without obligation.

Running out of cash (liquidity risk) is a Treasurer's primary concern among the financial risks faced by their company, ahead of interest and currency risk.

This is simply because without cash, a company cannot survive.

The cashflow statement provides the treasurer with a useful summary of where a company's cash has come from and where it has gone, over a period of time, such as a financial year.

It has three sections: cash from operations, cash from investing activities, and cash from financing activities.  A summary section shows the cash at the start of the period, the net increase or decrease in cash during the period, and the cash at the end of the period.

The P&L and Balance sheet statements are the source of the data for the cashflow statement.

To discuss Cash or Treasury management for your company, including interim Treasury management, funding, and financial risk management, contact me for a free, confidential chat without obligation.

According to a survey by Treasury Strategies, a division of Novantas, the most common obstacle to optimising working capital for Treasurers is the quality of data used (for forecasting).  As the saying goes "garbage in, garbage out".  The next biggest challenge for treasurers was forecasting accurately when their customers (debtors) will pay.  Part of the problem is knowing who will not pay cash owed on the due date (default) and what percentage will never pay the cash (resulting in a write-off).

For some treasurers, variance analysis was their biggest challenge.  This process involves analysing the difference between what working capital balances were forecast and what balances actually occurred, and understanding why the differences arose and trying to reduce them in future.

Some treasurers might be hampered in managing their working capital by relying on indirect working capital forecasting methods prepared by FP&A versus preparing them within Treasury and using the direct and simpler Receipts and Payments method of cash forecasting.

Poor working capital management caused by poor cash forecasting can result in significant amounts of cash  unnecessarily tied up in a company's working capital, such as its debtors or over-stocking.  That cash could be better deployed in producing positive cashflow or reducing interest unnecessarily being paid on debt outstanding.

To discuss Cash or Treasury management for your company, including interim Treasury management, funding, and financial risk management, contact me for a free, confidential chat without obligation.

US based Treasury Management consulting firm, Treasury Strategies (a division of Novantas Inc) has released its "Annual State of the Profession" Treasury Management survey.  It makes for interesting reading of the latest thinking of many corporate treasurers, in particular what changes in Treasury Management were permanent and what were temporary?

Covid 19 triggered permanent changes in how treasury departments work, i.e., remote staff and the technology to support that were permanent features of change in some corporate treasury departments, but for others (that transitioned back to office work) these changes were temporary.

Another permanent change was eliminating paper, automating treasury processes, and (a perennial task in a treasury) cash forecasting.

The dramatic increase in liquidity funding was a temporary response to Covid for treasury teams.

To discuss Cash or Treasury management for your company, including interim Treasury management, funding, and financial risk management, contact me for a free, confidential chat without obligation.

US based Treasury Management consulting firm, Treasury Strategies (a division of Novantas Inc) has released its "Annual State of the Profession" Treasury Management survey.  It makes for interesting reading of the latest thinking of many corporate treasurers, in particular what are the opportunities for Treasury Management?

With low interest rates and the threat of them rising, now is the time for treasurers to raise debt according  to the survey.

The time is also ripe for using technology to improve treasury processes such as payments, data-driven decision-making, and automation, and eliminate paper.

Perennial treasury management tasks are also seen as current opportunities but they're not the main ones: liquidity, staffing, banking, cash conversion cycle, forecasting, and alternative (non-bank) payment methods.

Treasurers need to be alert to opportunities and take them when they arise.  The survey shows there is much to improve current treasury management practices and opportunities exist for the corporate treasurer to add further value to the financial management of their company.

To discuss Cash or Treasury management for your company, including interim Treasury management, funding, and financial risk management, contact me for a free, confidential chat without obligation.

US based Treasury Management consulting firm, Treasury Strategies (a division of Novantas Inc) has released its "Annual State of the Profession" Treasury Management survey.  It makes for interesting reading of the latest thinking of many corporate treasurers, in particular what they think are their primary and secondary risks.

With the pace of development of treasury technology and Treasury department employees working remotely, not surprisingly, the risk of fraud and cyber security, and personnel management, are high on the list of primary risks facing treasurers. 

Reflecting the investment and raising of funds, another risk for the treasurer is the rate of return received or paid on funds.  Though the interest rate environment that has been low (a concern for investors) interest rates are threatening to rise owing to inflation and so inevitably means higher interest costs for treasurers to pay on borrowed funds.

Secondary importance risks for the corporate treasurer included internal and external operational processes and controls; volatility of commodities, foreign currency rates, and interest rates; replacing LIBOR; upgrading the Treasury Management System because it cannot cope; and restructuring bank loans.

To discuss Cash or Treasury management for your company, including interim Treasury management, funding, and financial risk management, contact me for a free, confidential chat without obligation.

US based Treasury Management consulting firm, Treasury Strategies (a division of Novantas Inc) has released its "Annual State of the Profession" Treasury Management survey.  It makes for interesting reading of the latest thinking of many corporate treasurers.

As expected, cash forecasting tops the list of priorities for the Treasurer, with liquidity and working capital management making a comeback into second place.  Optimising banking services remain a factor high on the list.  The top three priorities are all cash-related activities, reflecting the critical importance of cash to a company and the most important task for a Treasurer.

Perhaps surprisingly, optimising or replacing the Treasury Management System and enhancing controls against cyber and fraud risks have jumped from 11 and 10th places to 4 and 5th places respectively in 2021.  These upward shifts might reflect the rapid development of technology in Treasury and the increased risks such developments present (for example, faster payments and processors might mean less time to detect and avert payment fraud and cyber attacks).

Support for acquisitions or divestments, replacing LIBOR, debt finance, and improving the payments process, were also on the list but farther down.

To discuss Cash or Treasury management for your company, including interim Treasury management, funding, and financial risk management, contact me for a free, confidential chat without obligation.

Rothesay, a pensions insurer that is exposed to long-term pension liabilities, has partnered with a mortgage lender to invest in 40 year residential mortgages. 

Investment and Treasury management says reducing cash flow or reinvestment risks is possible by matching the cash flows of long term liabilities with offsetting long term assets.  That asset and liability management strategy can however backfire if a Treasurer or fund manager fails to recognise the early redemption options embedded in the mortgage contracts.  Just because a mortgage says it is for 40 years does not mean Rothesay won't be exposed to reinvestment risk years before the agreed 40 year  term is reached. 

If, for example, interest rates do rise as expected because of rising inflation, then homeowners probably won't redeem Rothesay's loans.  If interest rates again fall, and far below the fixed rate paid on mortgages, then borrowers probably will redeem their relatively high interest rate 40-year mortgages. 

In that case, Rothesay faces the cash impact of having to reinvest the cash at a lower market interest rate than the original fixed mortgage rate.  The consequence is reduced investment income to meet Rothesay's pension liabilities, and a negative return on capital that could remain for up to 40 years ahead.

Kensington Mortgages does not charge early redemption charges so not only is Rothesay exposed to reinvestment risk, it is not going  to be compensated for it with early redemption charges.

Financial options can be hidden within contracts so it is essential to read the fine print and thoroughly understand the contracts and the cash flow of assets and liabilities over the entire term of the exposure.  Only then can a Treasurer or Fund Manager be sure cash flows are genuinely matched or that they are, contrary to first impressions, mismatched and so the company remains exposed to financial risk.

To discuss cash or Treasury management, including interim Treasury management, funding, and financial risk management, contact me for a free, confidential chat without obligation.

TMC (a deep sea miner of commodities useful in manufacturing) did not get the cash it was promised by investors so now its strategy of getting a licence to mine is in doubt (Financial Times).  TMC says it would prefer the missing $200m cash in its bank account but says it has enough cash to get the licence to mine by 2023. 

It is suing the investors in default, but there is no certainty the promised cash will be received or when.  It also has to contend with potential buyers of its metals who've refused to buy (except Glencore) because the environmental impact of its mining is not yet certain. 

Companies survive on cash to fund operations and they work on the expectation they will receive cash from sales.  TMC has no certainty of sales and no certainty of funds.

TMC faces many cash and operational risks.  Will buyers buy its output? Will it have sufficient cash to get it through the months and years ahead and get the licence in 2023?  Will its application be approved in 2023?

A short seller claims TMC overpaid for an asset and that it inflated costs to give a false impression that its scale of operations was large – both denied but the raft of bad news has not helped its share price, down from £10 to around £4.

To discuss cash or Treasury management, including interim Treasury management, funding, and financial risk management, contact me for a free, confidential chat without obligation.

WFTV Channel 9 aired a story "Inside the collapse of Zillow" that illustrates the importance of cash and the consequences of forgetting that markets go down not just up. 

The company's strategy was to exploit the market demand for US homes.  With multiple offers to buy a home coming within hours of it being put on the market, the company wrote an algorithm that offered the seller a sale price at the click of a button (i-buying).  It made, for example, an offer (accepted) of around $430K (according to a local resident) for a house that had been marketed for $285K. 

in 2019, Steve Eisman of Big Short' fame said Zillow had one of the most flawed business models he had seen in a very long time, adding that it did not think the business understood the property market risks it faced.

The company's strategy was to buy, refurbish and sell ("flip it" using US slang) homes in a rising housing market and so recoup the cash outlay to make a quick cash surplus (profit). All very well until the rising market started to dip but, crucially, the company continued to pay "top dollar" for houses in a cooling market.

Perhaps because the company has lost so much cash or it thinks the market will continue on a downward trajectory for longer than it can sustain negative cash flow, it has decided to pull out of the market.  It is, however, left holding a stock of hundreds of houses for sale.  It hopes to sell these and cut its losses when  seasonal demand returns (or is expected to return) in 2022.

Zillow's "get rich quick" strategy backfired perhaps because of poor market research, greed, poor algo programming, or a combination of these. or perhaps its cash reserves might have been unable to sustain more cash going out than coming in (overtrading). 

It is a truism, that a corporate treasurer will do well to remember, that companies fail not because they don't make a profit, but because they don't have cash.  For Zillow, it made neither profit nor cash, so not surprisingly, it collapsed.

Basic Treasury Management 101 tells the Treasurer to manage company cash, because without it a company will suffer a liquidity crisis and then collapse. 

Cash forecasts should be prepared and updated regularly, and checked for their reliability using variance analysis.  Cash buffers should be held either as cash or committed lines of credit, to avoid insolvency or prolonged financial distress.  Markets must be monitored and the probabilities of rises and falls estimated and their consequences for cash levels.

To discuss cash or Treasury management, contact me for a free, confidential chat without obligation.

Treasury Today gives some pointers on what to think about when setting up a cash forecast process within Treasury:

Ask the question "To make these specific decisions, how accurate does the cash forecast need to be?"  If it is a strategic decision, perhaps rounding to the cash forecast figures to the nearest £5m or quarter is OK.  If it is to hedge a specific exposure, figures to the nearest £1K or day might be essential.

Make business units accountable for the quality of the figures they must provide and the variances between forecast and actual figures.  Incorporate KPIs.

Reassess the cash forecasting process when change occurs (e.g an acquisition) to ensure the cash forecasting process is still fit for purpose.

Using the services of a Treasury Consultant can be a worthwhile investment not only for the time and cost saved but to help mitigate financial risks and ensure the Treasury provides an excellent service to the company.

To discuss improving your Treasury management, contact me for a free, confidential chat without obligation.

Here is a good overview of the issues and what to do, from Treasury consulting firm, Redbridge Group.

Why bother with cash pooling?

• Reduce bank funding and increase available internal cash resources
• Increase visibility of available internal cash
• Reduce the number of currency conversions and so reduce transaction costs and administration
• Increase operational efficiency across the group and at each subsidiary

And here are a few reasons of my own:

• Encourage employees to think of cash
• Improve cash forecasting and so increase return on investment and/or reduce cost of funding and so increase RoI
• Reduce the number of banks, bank accounts, and so fees and administration.

Knowing which countries and subsidiaries to include in the pooling structure, whether to adopt a hybrid pooling structure (zero balancing and notional pooling), the strengths and weaknesses of banks to be possibly included in the structure, and the legal, tax, accounting, and regulatory requirements of pooling cash cross-border and across legal entities, are major factors that determine the optimum structure used in practice. 

Using the services of a Treasury Consultant who understands the market and keeps up with changes, can be a worthwhile investment not only for the time and cost saved but to ensure the treasury is adopting best practices and so providing the best service to the company and its subsidiaries across the globe.

To discuss improving your Treasury management, contact me for a free, confidential chat without obligation.