Optimising use of liquidity and attaining higher accuracy of cash forecasts through HSBC Cash Flow Forecasting
Background & Scope
The company is an engineering and technology group. The company’s treasury team had previously relied on using manual data entry and modeling to forecast future cash positions.
The company was looking to maintain full visibility, control and access of their global cash positions. Most importantly, they wanted to be able to have higher accuracy and increased transparency on their projected future cash positions.
The manual nature of cash flow forecasting resulted in a significant amount of time and effort being spent by the treasury team on forecasting cash positions at the expense of higher value-added tasks. Additionally, these manual forecasting efforts generally resulted in low accuracy forecasts.
This lack of accurate cash forecasts had a knock-on effect on other processes. For instance, the company faced heightened liquidity risk as a result of the low accuracy of forecasts, which inhibited the treasury team from managing risk adequately. This led to the company relying on processes such as using external borrowing to fund daily liquidity needs or holding excess cash, resulting in both increased expenses, and reduced interest income.
HSBC’s Cash Flow Forecasting (CFF) platform helps the company streamline forecasting complexities and increase transparency of future cash positions. The CFF platform provides greater automation over forecasting processes by enabling automated data entry methods into forecasting models and templates that are subsequently automatically generated by the platform.
Access to the platform can be customised to allow the company’s various business units to submit their own forecasts. Cash flow key performance indicators (KPIs) could also be tracked through its Cash Flow KPI dashboard. Detailed reports provide analytics such as key cash flow drivers, and comparisons between forecasted and actual cash positions through the CFF platform. Altogether, these helped achieve higher accuracy of forecasting by granting greater visibility on actual versus forecasted future cash positions.
The CFF platform is accessed via HSBCnet, which allowed the company access to bank statements, real-time balances, and cash projections on a single, centralised platform.
The solution delivered improved visibility and higher accuracy of cash forecasts. This helped the company’s treasury team to better manage risks, and achieve strategic mid to long term goals.
The higher accuracy of cash forecasts also enabled optimal global liquidity management processes for the company, helping to reduce costs and improve returns on excess cash.
The solution’s greater automation of cash forecasting helped to significantly reduce the time and effort spent on cash forecasting, allowing the treasury team to focus on more value-added tasks. As CFF could be accessed from HSBCnet, the company could now manage accounts and forecast cash flows through a single online banking platform.
This document is issued by The Hongkong and Shanghai Banking Corporation Limited (“HSBC”).