Cash forecasting for Treasury Management

Where to start with Cash forecasting? Permjit Singh Treasury Consultant finds out

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.

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