iOCO: Solving Covid-19 together through Cash Flow Management

Chris Hewitt, iOCO Solutions Manager, explains why a robust cash management system is crucial in Covid times.

Managing cashflow has always been important to ensure prosperity and sustainability. This has become more critical than ever under the current conditions of global economic uncertainty due to Covid-19. It is a grim but realistic prediction that millions of businesses around the world will close simply because they don’t have enough cash to continue trading.

All businesses invest significant time and effort on revenue and cost forecasting while at the same time often neglecting the crucial scrutiny of cash movements that are necessary for accurate cash flow projections.

It’s important to understand that even if profits are forecasted, they do not necessarily translate into cash coming into the business. A business may appear to be profitable for the foreseeable future, but it can run into severe liquidity problems if the physical flow of cash is not carefully monitored.

Modelling cashflows can be an extremely time consuming and complicated process with many different dynamics to be considered, including:

  • Forecasted revenue and expenses.
  • Timelines on debtors’ payments.
  • Current stock levels.
  • Stock required for future sales.
  • Loan Repayment Terms.
  • Creditor repayment terms.
  • Payment dates for salaries & wages.
  • Expected changes to interest rates.
  • Exchange rate fluctuations.
  • VAT and corporate tax payment timing.
  • Finances that need to be raised in the future.
  • Capital expenditure plans and timing.

Many businesses use Excel for forecasting and although it is a versatile and flexible tool, it can be time consuming and risky.

IBM’s Planning Analytics is an extremely powerful and flexible financial modelling tool. It has an Excel front end with which users are familiar, as well as a compelling web interface to deliver powerful dashboards. All information presented in the spreadsheet, or web interface, is stored and managed in a centralised, cube-based database.

Notable features include:

  • A proven tool used by thousands of organisations around the world.
  • Powerful budgeting, forecasting, and cashflow capabilities.
  • Facilitates modelling of complex budget/forecast and cashflow processes.
  • Highly scalable and can handle large volumes of data.
  • Negates the need for multiple Excel spreadsheets, which are error prone and complicated.
  • All models are built from the “ground up” with no pre-configured modules.
  • Enables the construction of customised cashflow models to cater for organisations’ unique considerations.
  • Addresses any industry vertical.

There are many ways to design a cashflow forecast, and each organisation will typically have its preference and required level of complexity or detail. Planning Analytics can be tailored to meet an organisation’s specific requirements.

Planning Analytics can import data from multiple data sources including relational databases and text files. Typical examples include bank balances from extract files; ERP systems; general ledger/trial balance information; debtors and creditors ledgers, payroll systems etc.

Where customers are already using Planning Analytics, they can leverage existing income statement forecasts. This can result in a faster turnaround time for cashflow forecasting.

All logic and data are stored at a database level, which results in a ‘single version of the truth’ in terms of both data and logic. Planning Analytics utilises ‘in-memory’ technology to instantly reflect changes to data and parameters. This facilitates powerful scenario, ‘what-if’, analysis.

Contact iOCO’s team of skilled consultants – we engage with customers to tailor a powerful, automated solution to meet requirements, model scenarios, and give complete cashflow visibility.