Real FD

Cash-flow Models

There is a secret in the design of cash-flow models that's commonly over-looked, yet implementing it can improve the quality of cash management and cut down on the amount of management time spent on it. It can do this more effectively than planning tools like Cognos and without the big capital investment.

A Common Design Error

A common design error is to design a cash-flow forecast in report layout format, but in doing this you are mixing up a number of different attributes of the model and limiting its flexibility.

Cash-flows should be prepared on a daily basis. Some Accountants will take a broader approach, but arguably in doing this the true high and low points in a month cannot be identified nor, as a consequence, can they be adequately planned for. Are you sure you are staging payments or investing in the money markets to best serve the business?

Adding Value

Our experience in modelling will add value to your cash-flow management. Our design methods, and algorithm building ensures

• the high and low points in your cash-flow are easily identified
• you can see whats changed between forecasts
• the behaviour of assumptions can be measured and therefore be acted upon
• the effect on future cash-flows of commercial decisions are identified before you negotiate terms
• more accuracy is obtained so you can stay within headroom, earn more interest in the money markets or obtain greater levels of discount
• information is presented in an easily understandable format to the wider executive team
• the model does not need to be continually re-invented as it rolls forward naturally, i.e. it is not limited to the 256 columns in Excel

Refinancing

Recently our excel cash-flow model was used to successfully support a £48million refinancing exercise. The model forecasted daily cash-flows for the next three years and demonstrated to the bank a thorough understanding of the companies cash-flow.

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