Cash Forecasting

Configuring Centralized & Decentralized Cash Management in TS CMO - Part 2

Sujith Nair — Wed, 27 Jul 2011 21:40:44 GMT

Todays post continues that series of posts that describes the ability of TS CMO to support multiple centralized and decentralized cash management and positioning needs of enterprise organizations. Today we will look at a case of decentralized cash management. (Please read the first post the describes a centralized scenario as well)

Decentralized Cash Management - Consider an organization head quartered in the US with operations in US and Canada, the US organization managing the treasury (cash and investments) for the US and the Canadian subsidiary managing their cash.

A decentralized cash management scenario is described below - the organization receives BAI files from banks and proprietary investment updates in the US and Bank proprietary files for cash and investments in canada. Cash management and Investments are decentralized and taken care of by treasury users in respective locations. Also note that two backend GL systems that TS CMO synchronizes with are part of this setup as well. You can read more about the GL integration capabilities of TS CMO here and here.

To accommodate this need 2 Treasury Operations Entities are configured - Canada and US and respective users or roles and accounts or account groups are assigned. Now users in the respective organizations can perform their day to day forecasting, reconciliation, positioning, reporting and other functions w.r.t the specific set of accounts. As noted previously, not all accounts need to be used position and they can be classified as such.

A third Treasury Operational Entity called North America is created with access to all accounts and is assigned to a specific set of senior management users who would need access to data across the enterprise- Note that users using this entity will use it for view only access as the cash management functions are performed within the US or Canada entities created earlier. This configuration is described below.

It is important to note here that we went from centralized positioning (described in the previous post) to decentralized positioning purely via end user configuration. It is also important to note that in the event that a new user or set of users need to perform a cash management function, all an administrator has to do is to assign that user or the role of the user to the appropriate tag using a web browser.
We will look at the same feature set in even more complex scenarios in the next couple posts. Thank you for reading.

Configuring Centralized & Decentralized Cash Management in TS CMO - Part I

Sujith Nair — Mon, 18 Jul 2011 19:47:56 GMT

Over the next 4 posts, I will describe the ability of TS CMO to support multiple centralized and decentralized cash management and positioning needs of enterprise organizations. To start, we will look at less complex scenarios and move towards the more complex models.

Centralized Cash Management - Consider an organization head quartered in the US with operations in US and Canada, the US organization managing the treasury (cash and investments) for the entire enterprise.

The centralized cash management scenario is described below - the organization receives BAI files from banks in US and Bank proprietary files for cash and investments in canada and investments in the US, it has one backend GL system that TS CMO synchronizes with. You can read more about the GL integration capabilities of TS CMO here and here.

TS CMO allows for the configuration of this model via the creation of cash operations entities or tags. In this case, since all cash management is done by the central US organization one cash operations entity (tag) called North America is created by the end user. All bank and investment accounts across the enterprise (US and Canada) that are used for cash management purposes (note that accounts can be marked as not used for cash management as well, useful when concentration accounts are used for positioning) assigned this tag. Appropriate users or roles (groups of users) from US treasury organization are assigned this tag as well ensuring that they can position for US and Canada.

Once a US treasury user logs, he or she will be able to position both in USD and CAD for the enterprise without any custom development effort. Exports to the backend GL system can be automated . In the above example the only transformations needed are to transform the proprietary bank and investment formats into TS XML format and transformation of the TS XML GL export to Oracle GL Specific format. Note that these transformations are fairly quick and either the TS managed services team or your internal IT team could do that.

In the next post, we will look at a decentralized cash management scenario.

Treasury Workstation Features - Cash Management Dashboard

Sujith Nair — Tue, 26 Oct 2010 22:49:19 GMT

As part of our look at product features, todays post focusses on the cash management dashboard that is part of our cash management operations module.

The dashboard provides a consolidated, real time look all transactions across banks and provides you with your cash position at this point in time. Please see below a screenshot of our cash management dashboard that reports on transactions across 3 banks with totals per flow code, grand totals per bank and your consolidated cash position (bottom right).

Flow codes are nothing but groupings of transactions. Banks send transactions with transactions codes that identify the transaction types - for example the BAI transaction codes that are part of a BAI file. Flow codes allow end users to group multiple transaction codes into a readable format.

For example the ACHC flow code above stands for ACH Credit and is mapped to following BAI Codes - 142 (ACH Credit Received), 143 (Item in ACH Deposit), 165 (Pre-authorized ACH Credit), 166 (Pre-authorized ACH Credit), 169 (ACH Credit) and 201(Automatic Transfer Credit). As you can see, all of these BAI transaction codes pretty much mean that these are ACH credits into your bank accounts. You can of course change the flow code to transaction code mapping using the application itself.

Now, the numbers in dashboard are auto-updated on receipt of transactions or forecasts (Note that forecasted transactions are highlighted in bold). Each number listed above is clickable and you can drill down to the transactions screen to view what transactions make up these numbers.

Down below are a series of buttons, ones that let you drill down to view and reconcile transactions with forecasts, view and manage forecasts, ability to access a few reports quickly, originate concentration and net funding wires and of course the ability to Submit - ie. to create a snapshot of the data or create a cash position at this point in time.

In the next few posts, we will look at the transaction reconciliation and forecast management features that a cash analyst would perform before submitting a position.

Thank you for reading.

Payments, Positioning & Integration for Hedge Funds - Overview

Sujith Nair — Thu, 07 Oct 2010 06:07:41 GMT

The last 2 posts detailed out various aspects of our implementation for a large hedge fund. Todays post or picture provides an overview of the complete implementation - this picture is an early version of the picture that will appear in a case study of our payments and cash management system implementation for hedge funds. Will post a link to it when available. Meanwhile, here is the overview.

Automated Accounting Treatment, Cash Position, GL Integration, Hedge Fund Treasury, Hedge Fund Treasury Worstation, Multi bank payments, Netted Payments, Payment workflow implementation, Reporting, Straight Through Processing, Treasury Management , Treasury Reporting, Treasury Workstation, Treasury Workstation Reporting

Treasury Workstation Features - Preliminary & Final Cash Positions

Sujith Nair — Thu, 30 Sep 2010 05:44:41 GMT

Daily cash positioning capability is probably the most basic, yet key function offered by treasury management systems. Today, we will look at cash positions at a high level- the types of cash positions that can be created using our Cash Management Operations module.

CMO supports two types of cash positions, a preliminary cash position (PCP) and a final cash position (FCP). The key distinction between the two being that preliminary cash positions are created for a future date and hence created based on forecasted data while final cash positions are created for the current day and would include any unsuppressed forecasts, reconciled current day transactions (reconciled with matching forecasts either automatically or manually by the cash analyst) and any current day transactions that were not forecasted.

Screenshot below shows positions for 9/29- both the PCP that was created yesterday and the multiple final positions created today utilizing the current day data in USD for the enterprise (enterprise is a tag and is a topic for another day). The multiple final positions shown above are based on changes in available cash based on intra-day updates from banks.

Note that since we support near-real time positioning of cash, positions are created using current day data. Eventually, when we do receive the prior day files the next day, the system reconciles these with matching current day transactions as well. However, for daily cash positioning purposes we utilize current day data. Having said that, we do offer the ability to position on prior day data only- the catch being that your positions will be a day late.

In short, CMO allows for multiple users within the treasury to collaborate and create forecasted positions (PCP) as well as near-real time final positions (FCP) based on current day data that is automatically imported from the banks.

Cash Position, Treasury Management , Treasury Workstation

Treasury Sciences Cash Forecasting Capabilities

Sujith Nair — Fri, 23 Oct 2009 20:47:40 GMT

In this post I will highlight typical challenges in implementing a short term cash forecasting system and discuss the options we provide as part of our product suite to address cash forecasting needs.

Most potential customers and customers that I have talked to understand the importance of cash forecasting and have some form of cash forecasting capability- they have some systems that contain partial forecast data or could possibly provide partial forecast data. If not systematic, most organizations at least have a spreadsheet or multiple spreadsheets.

Typically, most organizations lack in timeliness and accuracy of their cash forecasts and in decision making capabilities based on consolidated enterprise wide forecast data from say multiple subsidiaries or multiple systems.

We will look at how we could help address timeliness and accuracy of consolidated enterprise wide forecasts systematically via our product suite.

Bulk Upload of Forecasts

If your forecast data is stored in a spreadsheet or can be put into a spreadsheet, we provide you with the ability to upload the spreadsheet into the system. This is the easiest and fastest way to manually upload multiple forecasts from multiple subsidiaries into the system. There are multiple value added feature associated with this as well- such as the forecast dash boards which lets users view the forecasts, edit and delete forecasts as well as roll back complete files that were uploaded into the system. You can reimport rolled back files as well.

Ours being a web based system users with appropriate privileges can upload data or view forecast data across subsidiaries and geographical boundaries.

Automated Import of Forecasts

Automated integration of forecasts from external systems that originate these forecasts via transactions (trades from a Trade Management System, Debt Payments or schedule from a debt management system and EFT origination data from an EFT system are examples) is the best way to ensure timeliness and accuracy of forecasts. Via a standard XML and web services exposed by our system, we have the ability to integrate with any system there is - provided the system we need to integrate with is an open system. i.e. the external system or an intermediate system needs the ability to communicate to a web service.

If you were to choose our Electronic Funds Transfer Module or upcoming Debt Management Module, it is already integrated to the CMO Module for Cash Forecasting purposes. Here again, there are multiple value added features that ensure upto-date information reporting and accuracy such as the creation of a forecast in CMO as soon a transaction is originated and the removal of the forecast from CMO if the transaction in EFT were to be rejected by an approver.

Manual Creation of Forecasts

We provide you the ability to create manual forecasts as well. Users with appropriate privileges can use web based forms, you can create and manage forecasts. This feature is typically useful while forecasting incoming transactions from systems that do not have integration capabilities.

Echo Backs

This feature is typically useful to forecast bulk payments. Say your AP system send a bulk file systematically to a bank with no human intervention. For forecasting purposes, we need to find out the appropriate amount that was sent to the bank with the appropriate value date. Now, there are 2 approaches to getting this data - (1) we could connect to the backend A/P system via the external integration capabilities discussed earlier or (2) we could have the bank tell us what they received- which is essentially the echo back.

An echo back is an automated transmission from the banks that lets our system know the most upto-date information on the bulk payment file. This communication typically contains totals and value dates and is sent by the bank as soon as it receives/processes the file. Our system in turn creates appropriate forecasts for the respective value dates automatically.

The four capabilities discussed above provide the ability for an organization, no matter what their situation is, to forecast enterprise cash accurately in a timely manner. There are multiple value added features in addition to the specific options listed above such as forecasting dashboards, calendar based views, ad hoc reporting capabilities, automated and manual reconciliation of forecasts, ability to capture accounting treatment on forecast creation and integration based on standards, all of which would help your organization forecast better.

Please do let me know if you have any comments or questions @ sujith@treasurysciences.com