CXC Report: How Corporate Treasurers Approach Medium & Long-Term Cash Forecasting
CompleXCountries (CXC) today published their report: How Corporate Treasurers Approach Medium & Long-Term Cash Forecasting.
There are few subjects on which all corporate treasurers agree. Cash forecasting is one: everyone agrees it is difficult, painful, and rarely accurate. And that is just the “easy” part, forecasting the short term, i.e., up to three months.
What happens when you reach out into the distant future – the medium and long term cash forecast? Surely, this is vital, if nothing else, so a company can plan its dividends and debt raising or repayment in advance? But it quickly becomes difficult, as techniques start to diverge. The best short term forecast is done looking at actual cash, and mapping out the expected receipts and disbursements. Beyond three months, this generally doesn’t work, as actual payments and receipts become less certain. People start to look at the strategic plan and try to work out the likely cash impacts – most treasurers view this as being less operationally relevant. Also, some people take input from the operating units and consolidate it, while others take a “tops down” approach.
Based on a corporate treasury peer group discussion, the report gives detailed insight into how eight senior corporate treasurers approach their company’s forecasts and how their processes are being developed.
The report (33 pages) is available to subscribers or can be purchased individually - the key findings from the report can be read here:
CompleXCountries (CXC) today published their report: How Corporate Treasurers Approach Medium & Long-Term Cash Forecasting.
There are few subjects on which all corporate treasurers agree. Cash forecasting is one: everyone agrees it is difficult, painful, and rarely accurate. And that is just the “easy” part, forecasting the short term, i.e., up to three months.
What happens when you reach out into the distant future – the medium and long term cash forecast? Surely, this is vital, if nothing else, so a company can plan its dividends and debt raising or repayment in advance? But it quickly becomes difficult, as techniques start to diverge. The best short term forecast is done looking at actual cash, and mapping out the expected receipts and disbursements. Beyond three months, this generally doesn’t work, as actual payments and receipts become less certain. People start to look at the strategic plan and try to work out the likely cash impacts – most treasurers view this as being less operationally relevant. Also, some people take input from the operating units and consolidate it, while others take a “tops down” approach.
Based on a corporate treasury peer group discussion, the report gives detailed insight into how eight senior corporate treasurers approach their company’s forecasts and how their processes are being developed.
The report (33 pages) is available to CXC Premium Subscribers or can be purchased individually (Enquire here) - the CXC Commentary (the key findings) can be read here: /how-corporate-treasurers-approach-medium-long-term-cash-forecasting
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