Select Page
Weekly cash flow planning with OneStream XF at Cable Connectivity Group

Weekly cash flow planning with OneStream XF at Cable Connectivity Group

Events

Weekly cash flow planning with OneStream XF at Cable Connectivity Group

Cable Connectivity Group (CCG) uses OneStream XF for monthly consolidation and reporting. With COVID-19 drawing increased attention to short term cash flow planning,

CCG’s CFO Mark de Haas decided it was time to professionalize the existing Excel-based weekly cash flow planning process he had put in place within his company pre-COVID-19. Utilizing the power of the OneStream platform, Satriun implemented the weekly cash flow planning process that has CCG benefiting from:

 

  • Weekly updates on cash per bank account
  • Weekly updates on revenues, debtor aging, and creditor aging per operating company
  • Weekly operating company cash flow forecasts, direct method, 13 weeks rolling forward
  • Variance analysis incl. explanatory notes on the differences between last week’s actual cash flow versus last week’s forecasted cash flow
  • Consolidated weekly cash flow forecast reporting and analysis

CCG Group Controller Geert-Jan Ottenheym shares his experience with the implementation and use of the weekly cash flow forecasting process in OneStream XF, next to having the cash flow forecasting solution demonstrated live.

Geert-Jan Ottenheym

Group Controller , Cable Connectivity Group

About Cable Connectivity Group (CCG): CCG is active in the production, distribution and assembly of specialty cables and cable connectivity solutions. The operating companies operate under their own name and employ over 600 people. They have a global customer base in end-markets such as machine building, agriculture, crane- and lift industry, healthcare and medical, railway, marine, offshore, installation food & beverage, aeronautics and aerospace. Cable Connectivity Group is majority owned by Torqx Capital Partners in partnership with management and TKH Group.

Would you like to see the recorded session?

Click the button

Weekly cash flow planning with OneStream XF at Cable Connectivity Group

Want to see the recorded session!

Cash flow accountability – three quick wins to turn fiction into fact

Cash flow accountability – three quick wins to turn fiction into fact

article

Cash flow accountability – three quick wins to turn fiction into fact

The IAS 7 “Statement of Cash Flows”, released in 1992, is one of the oldest international accounting standards. One would expect that with a legacy spanning over 25 years, cash flow would be well embedded within the performance management framework of every corporation. But the reality is the opposite. Cash flow statements exist in the obscurity of financial reporting. Most corporations go all-in on the income statement and base their financial reporting and incentive plans on profit and loss, often detailed by segment and function. Strange, since cash flow is regarded as the most justifiable method to appraise economic value. So how can cash flow accountability be turned into a fact?

It all starts with the indirect method, the most commonly used presentation format for cash flow statements. There are many reasons why the indirect method prevails over the direct method; mostly because the indirect method can be derived from financial accounting information and thus is relatively easy to prepare. Most financials unfortunately struggle to really understand what an abstract measure like ‘operating profit adjusted for changes in working capital’ really means. Here are three quick wins to get more value from cash flow statements, even when using the indirect method.

 

1. Reorganizing the balance sheet

Funny enough, it all starts with the balance sheet. Corporations generally elect to present and review balance sheets according a GAAP lay out, meaning assets on the one hand, and equity and liabilities on the other hand. This traditional lay out does not promote easy insights into operating performance and value, as it mixes together operating, investing and financing activities. A better practice would be to implement a derivative lay out that organizes the balance sheet by capital employed – operating and investing activities – versus funds provided – equity and net debt, and thus financing activities. This lay out provides a valuable connection to the three main captions of the cash flow statement.

 

2. Reorganizing working capital

With operating activities separately visible on the balance sheet it is also recommendable to prepare a crystal-clear definition of working capital. As a first measure, trade working capital and non-trade working capital should be identified. Trade items relate to those assets and liabilities that are directly linked to revenue and operating expenses. Those trade items in turn can be grouped into sections related to customers, suppliers, employees and tax authorities. Having trade working capital organized as such provides two powerful opportunities: on the one hand to come up with good DSO/DPO/DIO definitions, and on the other hand to provide a more ‘direct’ view on cash flow by linking each of the separate components of income statement to their counterparts in trade working capital.

 

3. Reorganizing cash flow forecasting

It is surprising to see that corporations can ask financials the impossible: to forecast a balance sheet. A balance sheet is a statement at a particular point in time – it is the logical end result of the transactions occurring up to that point in time. Therefore, forecasting should be all about income statement and cash flow statement. Utilizing reliable DSO/DPO/DIO definitions on top of the income statement allows to pretty accurately predict the evolution of working capital. Add on top forecasts for capital expenditure, income tax payments and payments from provisions and you already come to a solid free cash flow definition for your operations. This is the type of accountability you want to delegate, while keeping more ‘corporate’ elements such as the funding decision in the hands of treasury. Don’t bother asking your operations for a full balance sheet and cash flow – stick to capital employed and free cash flow instead.

 

Implementing these three quick wins already can boost the value added that cash flow statements bring to the performance management of the corporation. Taking cash flow to the next level – breaking it down by cash generating unit that may involve segmentation by division or product group – may be more complex and may require adaptations to how financial information is captured within the accounting ledgers.

 

Do you want to master Cash Flow?

I am hosting a cash flow masterclass in Amsterdam, The Netherlands, starting 12 November. Interested?

Casper van Leeuwen is executive partner at Satriun, an international Corporate Performance Management consultancy with offices in the Netherlands, Switzerland, France, Germany, Romania, Israel and Belgium. Satriun advises large corporations in the areas of financial consolidation, budgeting & planning, and management reporting.