Moving from Fragmented to Centralised Cash Management

December 2013 by Mickey Vonckx, Head of Sales Europe, Hanse Orga International B.V.

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Moving from Fragmented to Centralised Cash Management This Whitepaper outlines the benefits of real-time, centralised cash management, and how it can be accelerated and optimised with the help of specialised technology.

The necessity of central cash management Driving financial efficiency and managing risk are top priorities on the treasury agenda. Many companies lack a central overview of their cash, and are therefore facing unexpected gap idle liquidity which introduces significant inefficiencies. The fragmented information about cash and financial transactions do not allow for an accurate view on the company’s exposure. The most efficient remedy for such a situation is a central cash management.

The ChallengesIt can be particularly challenging for treasurers of large corporations with many subsidiaries to keep track of important financial information. They have to account for the various cash flows, payment flows, and cash positions of each subsidi-ary, as well as the total numbers of company bank accounts. Often, when these treasurers require a real-time view of the company’s cash situation, it triggers lots of parallel manual activities by various departments and local entities. Employees will have to update spreadsheets with the latest figures and to modify planning data before the requested information is forwarded to the head office. These fragmented manual processes easily introduce errors or inconsistencies and takes time before the cash positions and forecasts are populated. As more and more banking information becomes available in real time and business environments become increasingly complex the challenge for cash managers grows quickly as well.

With the treasurer left to work from this potentially incomplete and unreliable information, companies can consequently lose out on opportunities for investing surpluses or for settling deficient accounts. Companies can also see a significant impact on their cash forecasting.

Consolidating Dispersed Data SourcesAlthough many companies have significantly stepped up their efforts in recent years to optimise their cash management and cash flow forecasting, there is still more room for improvement. The limitations of using spreadsheets for consoli-dating such fragmented data are obvious: many manual tasks are involved which may lead to errors and tie up staff who could work more effectively on analysing the actual results.

Implementing Specialised TechnologyThe change is here. By deploying specialised technology, which is ideally fully embedded in centralised ERP systems, for example SAP, corporates are on the inside track when it comes to efficient cash flow forecasting. With such a solution, all balances of the company’s subsidiaries are automatically, and without any risk-prone interfaces, integrated into a single integrated real-time view. Indifferent of the types of systems, currencies or local conditions, all subsidiaries are taken into account and seamlessly integrated to enable company-wide visibility. It is not the accounting data that forms the basis for the forecasting, but instead, the planning is based on the more up-to-date actual data that is received from the banks end of day or even intra-day. Automated processes reduce the time-consuming manual transfer of information from one source to the other and ensure reliability. International corporations benefit from time-saving, automated technology that enables a comprehensive and company-wide overview in real time. The actual financial situation of a company becomes instantly clear, and cash flow forecasting is based on solid data instead of best guesses. This drives efficiency gains and also allows for a reliable performance analysis of the company’s subsidiaries, business operations, products, and other elements.

ConclusionIf corporates want to leverage best practices, it is imperative to maintain an efficient and effective cash flow forecasting. A central and real-time overview of company-wide cash positions forms the basis for accurate strategic decisions, and

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internal as well as external resources can be mobilised more easily. Next generation ERP-integrated software solutions automate manual tasks and ensure optimal levels of liquidity and provide transparent and compliant data.

The key features to look for in cash management technology

• Establishmentofreal-timeenterprise-widecashpositionviewoverallentitiesinSAP,alsointegratingnon-SAPentities• Independencefromaccounting:noneedtowaitfortheaccountingdepartmenttopostallpositionsforacashoverview.• CashOptimisationtoolssuchaszerobalancing,poolingandsoon• Functionstosimulatecashtransfersforpredictingandtestingtheirfinancialimpactonthebusiness• Variancechecks(actualvsplanned,plan/plan)• Analysisofbankcosts• Highlyautomatedactualdataassignmentandcashforecastingcapabilities

How Hanse Orga Can Help Centralising Corporate Cash ManagementHanseOrgaoffersaspecialisedsolution forachievingacentralcashmanagement:TheFinanceSuite Cash & Liquidity Management solution enables companies to get visibility, control and optimisation for the cash management and liquidity planning. The intuitive design coupled with innovative features brings higher levels of automation to the daily cash manage-ment processes. The integration in SAP allows organisations to extract all relevant data from the various SAP ledgers interface-free while performing its cash management functions independently from the financial accounting processes. Implementation time of the highly configurable software is kept to a minimum. It brings unparalleled transparency and automationtotheenterprise-widecashmanagement(alsonon-SAP)andsupportseffectivecashpooling.

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About Hanse Orga

HanseOrgaisoneoftheleadingprovidersofspecialisedfinan-cial software solutions for SAP®. We are certified as a SAP® Software and Technology Partner. With over 180 dedicatedemployees,wesuccessfullycompletedover90projectsin2012to the benefit of our customers. Our customer base consists of 500+worldwidecompanies,spanningallindustriesincluding:OilandGas,Chemicals,Insurance,Retail,Manufacturing,ConsumerGoods,Telecom,Logistics,Government,etc.HanseOrgaoffersfully integrated SAP® software solutions for optimising all pro-cessesalong the FinancialSupplyChain. Formore informationaboutHanseOrga and our solutions for cash application, pay-ments, treasury management, cash and liquidity management, bank account management, or our consultancy services, please contact us at www.hanseorga.com