When we spoke with CFOs and treasury managers, they identified the lack of access to necessary information as one of the biggest challenges in cash flow planning. A major issue is that business planning typically follows an accounting-based approach, which can significantly differ from a cash flow perspective. Additionally, business plans often focus on balances rather than individual transactions, making it harder to translate them into a cash flow view.

As a treasury manager responsible for preparing the company’s cash flow plan, you’re faced with the challenge that the Controlling department builds the business plan based on an accounting approach. This suits everyone just fine, as it offers a clearer view of the profitability of products or segments, and it’s also helpful to know what the company’s financial result would be—assuming the highly unlikely scenario where everything goes exactly according to plan. So, everyone is quite content with this setup… except treasury, of course.😊

A EUR 12 million annual contract with a key supplier is reflected in the business plan as EUR 1 million per month, although in reality, payment is made in just two installments. Similarly, while we forecast EUR 10 million in monthly revenue from product sales, customers pay daily, and the bulk of sales typically occurs in the first week of the month. And these are just a few examples. To accurately forecast the company’s cash flow position, the treasury manager must go beyond the business plan—gathering insights based on experience and contractual details that show how costs and revenues actually materialize in the bank accounts.

Even when this process is carried out – with extensive manual effort, numerous phone calls and emails, and the occasional plea for extra information – the next challenge is how to actually use this data to build a reliable cash flow forecast. In most cases, even with a sophisticated IT landscape, there’s still no clear alternative to the classic Excel spreadsheet.

Recognizing this recurring issue among our clients, we developed Inforex, our Treasury Management System (TMS), specifically to bridge the gap between business plans and cash flow plans. Regardless of the level of detail in a company’s business plan, our system enables the mapping of business plan items to cash flow plan elements. This also allows for accurate plan-versus-actual comparisons at the cash flow level. Each item follows a lifecycle: it originates in the business plan, is then transferred into the cash flow plan, and from there can be tracked through stages such as ‘planned,’ ‘contracted,’ ‘invoiced,’ and finally ‘paid.’ We believe that this capability to transform and monitor business plan items such as cash flow items is a critical, yet often missing, feature in treasury systems.