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4 reasons why treasury & finance should not use spreadsheets for forecasting

Cash flow forecasts continue to remain spreadsheet-based in most enterprise organisations. But with innovative new forecasting technology coming to the fore, can this new breed of tech unsettle the dominance of MS Excel and help treasury and finance professionals overcome the problem of inaccurate data?

Accuracy, control and efficiency are key drivers in today’s business environment. This also applies to the cash flow forecasting process.

Knowing what cash you will have available in the future, is the first step in identifying potential cash shortfalls and improving how you use surplus cash. It can also help drive down dependency on financing, by providing relevant and timely information on whether your organisation will have sufficient liquidity to meet its obligations.

Surely then, if you’re responsible for cash and liquidity management and you’re finding existing cash forecasting tactics ineffective within an organisation, looking at under-performing processes is of utmost importance.

“We’ve always done it that way”
Treasury & Finance Professionals

Powerful, familiar and flexible. It’s easy to understand why MS Excel is the lingua franca for treasury and finance professionals when it comes to cash flow forecasting.

With user-friendly features and nominal additional expenditure, other than your standard business operational software licence, it’s also convenient. However, for large enterprise organisations who rely on cash flow forecasts to plan investment strategies and complex business decisions, it could be a potential liability.

Here are four reasons why you should consider alternatives to spreadsheets for your cash flow forecasting requirements.

REASON #1 – Time, time and more time

Manual processes, data gathering and administrative responsibilities.

Corporate treasurers and senior finance professionals have traditionally accepted these everyday tasks as part and parcel of being in the industry. Used to capture, track and reconcile data for years, spreadsheets have grown so complex, intertwined, and widely used that treasury and finance professionals cannot figure out an alternative method for cash flow forecasting.

For corporates with various banking relationships, multiple accounts across different banks and across multiple regions, this means almost half of their treasury analyst’s time can be spent on reconciling bank statements alone.

Whilst many would argue that there is a clear diagnosis for having a Treasury Management System (TMS), there’s just not enough in the budget to make it a worthwhile financial investment.

BUT just because a TMS is not a viable option, doesn’t mean automation is out of reach. There are other tactics, solutions and improvements that can be made to achieve similar, if not better results – and at a fraction of the cost.

REASON #2 – It’s expensive

Yes. We recognise that implementing a TMS has historically been an expensive solution and for many treasury and finance professionals, this has always been nirvana. However, there’s more to treasury software than a TMS, and desired outcomes can be achieved far more cheaply than you would imagine.

Partly down to technological advancement, and partly a reflection of the broad range of treasury and finance software now available in the market. Today, you can meet the treasury and finance functions unique needs with scalable, flexible treasury applications that you can purchase and implement, based on your timeline and resources.

Achieving your desired automation goals and specific treasury requirements no longer requires an extensive budget – all you need to understand is what Treasury Pain Points you want to solve, identify the tools that can solve this for you, and then build a business case to justify the move from spreadsheets.

REASON #3 – Errors and mistakes

Spreadsheet errors can cause major problems for treasury and finance professionals and using them continually is a risky decision for several reasons.

According to the European Spreadsheet Risks Interest Group (EuSpRIG), an organisation that deals specifically with spreadsheet errors, almost 90% of spreadsheets have errors.

From errors in the data with incorrect or missing information to more complex formula and macro level faults. Applying a flawed spreadsheet in a treasury or finance function can bring about operational risks, which could lead to severe consequences.

Strategic decisions are made based on what you disclose in these spreadsheets, and any fault or mistake could result in stakeholders losing trust with your treasury and finance function.

In addition to this, the risk of errors is likely to increase further once you’ve identified that your spreadsheet is corrupted. As you start to decode and decipher the spreadsheet (a mammoth task that your treasury or finance team just doesn’t have the time for) to find the root cause of your problem, you could find that there is more to it than meets the eye.

REASON #4 – Security is everything

There’s no doubt that spreadsheets are convenient forecasting tools. And although tools like MS Excel and Google Sheets are very good at what they’re designed to do – they are not necessarily secure.

Internal and external fraud, cyber security, information security and data privacy are major concerns for enterprise organisations in today’s digital, data-driven world. Spreadsheets lack the most basic security mechanisms and have limited  authentication measures (or none at all), features that are included in most leading treasury applications.

Then there are other security problems. Particularly in terms of untraceable, multiple copies of spreadsheets; anyone with access can create a copy and email it to themselves.

Data encryption, multi-factor authentication, sophisticated user access controls and IP filtering are just some of the sophisticated security features that leading treasury applications invest in to thwart and eliminate rogue or illicit activity.

So, what are the alternatives?

To help treasury and finance professionals understand how they can move away from manual spreadsheet-based cash flow forecasting to a semi/fully-automated process, we’ve conveniently put together a new advisory playbook to help improve your cash flow forecasting capabilities. Download your copy below.


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